Hong Kong stocks fell to a three-week low yesterday, led by the property sector, as borrowing costs in the city looked set to rise after a US interest rate hike.
The Hang Seng Index fell 1.2 percent, to 25,565, while the China Enterprises Index lost 1.6 percent, its biggest one- day percentage loss in six weeks, amid worries that China's economic recovering is losing steam, to 10,346 points.
Most sectors fell, with the decline led by the real estate sector, which is vulnerable to higher borrowing costs.
Shares of New World Development (0017) fell 2.3 percent, Hang Lung Properties (0101) retreated two percent and Sun Hung Kai Properties (0016) was down 1.7 percent.
The financial sector was also under pressure yesterday with HSBC (0005) down one percent and Standard Chartered (2888) also down 1.6 percent.
Shares of apparel company Global Brands Group (0787) slumped 21 percent, and the share price of retailer Esprit Holdings (0330) was down 13.3 percent.
Chordio Chan Siu-ping, general manager and head of investment management at Bank of China (Hong Kong), said there was not a very strong reaction towards the Federal Reserve's rate hike decision and there was not significant volatility with Hong Kong dollars. He believes there will not be a massive capital outflow from Hong Kong and Asia following the rate hike, adding that capital is still abundant in the Hong Kong market and there is no pressure among banks to raise interest rates.
He said it is still subject to debate whether the Fed would raise the rate again this year.
China stocks were little changed amid persistent fears that policy tightening measures will soon start to weigh on the country's economic growth, despite largely resilient data reported the previous day.
The blue-chip CSI300 index fell 0.2 percent, to 3,528, while the Shanghai Composite Index added 0.1 percent to 3,132.
"We're seeing more equity supplies but less liquidity, so China's stock market will likely remain sluggish," said Wei Jianfei, analyst at Lianchu Securities.