The slump in Hong Kong equities risks turning into a rout as the protests gripping the city show signs of escalating.
The Hang Seng Index lost 1.82 percent, or 494 points, to 26,571 percent, the lowest close in a month, yesterday.
Local developers and landlords suffered the brunt of the selling as all stocks dropped - a broad risk-off session that has happened only twice before in the past three years. Recent ebullience fueled by trade war optimism has faded.
Shares of New World Development (0017) fell 4.91 percent to HK$10.46 yesterday, becoming the biggest loser among blue-chip stocks. Sino Land (0083) dropped 3.21 percent to HK$11.44, while Wharf Real Estate Investment (1997) declined 3.65 percent to HK$42.25.
Shares of Hong Kong Exchanges & Clearing (0388) slipped on concern that unrest will cripple trading volume. Its shares fell 2.1 percent to HK$242.2 yesterday, taking its retreat for the week to nearly 5 percent.
That came even as Alibaba Group won approval to forge ahead with a Hong Kong share sale that could raise at least US$10 billion (HK$78 billion) in the city.
"We're seeing ongoing attrition in Hong Kong with no clear resolution in sight," said Gerry Alfonso, executive director of the international business department at Shenwan Hongyuan Group. "It looks like we're going to have a tough end to the year."
To Kenny Wen, a strategist at Everbright Sun Hung Kai, the best way to play the market is to not play at all. "It's very hard to tell which level is safe now," Wen said. "Investors should cut their exposure until there is some clarity in the ongoing situation in Hong Kong, as well as the trade talks."