Hong Kong equities plunged almost six percent Wednesday to a seven-month low as contagion from a rout in China spread into regional markets while traders are also buffeted by fears for Greece's future in the eurozone.
It came as shares of Chinese oil giant Sinopec were suspended after more than 1,200 mainland firms stopped trading on Chinese bourses as mainland stocks suffered a precipitous fall that has wiped billions off valuations.
With Shanghai struggling, Chinese investors rushed to sell off shares on the Hong Kong exchange, which is closely linked.
"The main reason the Hong Kong market is going down is because these two markets (Shanghai and Hong Kong) have high correlation, with many mainland companies listed in both," said financial analyst Castor Pang.
The Hang Seng Index tanked 5.84 percent, or 1,458.75 points, to 23,516.56 -- its lowest close since the start of January. Turnover was a massive HK$235.97 billion (US$30.45 billion) as mainland investors frantically moved to cash out after piling into the market in recent months.
It had sunk as much as 8.18 percent at one point, its heaviest loss since October 2008 at the height of the global financial crisis.
The benchmark Shanghai Composite Index closed down 5.90 percent, or 219.93 points, to 3,507.19.
The Shenzhen Composite Index, which tracks China's second exchange, dropped 2.50 percent, or 48.38 points, to 1,884.45.
Hong Kong was sent into orbit from the start of April when Chinese authorities relaxed rules on southbound trading for mainland investors using a stock link-up between the city's exchange and Shanghai.
"A lot of Chinese investors who are trading through the stock connect are trying to withdraw money from Hong Kong," said Pang, adding that share value in many smaller firms was dropping more than 20 percent a day.
- Fears of collapse -
There were also big losses around Asia, with Tokyo, Taipei and Sydney worst hit, while US-listed Chinese stocks also tumbled.
With a series of actions by Beijing to staunch the bloodletting, there are fears the market collapse will spread to the already struggling Chinese economy, the world's second biggest and a key driver of global growth.
Shanghai is down more than 30 percent from its closing peak on June 12, when it had risen by more than 150 percent in 12 months in a borrowing-fuelled frenzy enhanced by hopes for economy-boosting government measures.
The Hang Seng China Enterprises Index -- which tracks Chinese firms listed in Hong Kong -- slumped 5.94 percent.
Shares in Sinopec were down 3.45 percent at HK$6.16 ($0.79) before trading was halted shortly after the break.
On Wednesday the chairman of the Hong Kong exchange, Chow Chung-kong, said it had "no intention to intervene in the market" but that the situation was being closely watched.
Traders are also nervously watching events in Europe, where leaders Tuesday gave Athens until the weekend to come up with a debt reform plan or be ejected from the currency union.
The move comes after Greece voted Sunday against another round of painful austerity they say has crippled the economy.
European Commission President Jean-Claude Juncker turned up the heat, warning "we have a Grexit scenario prepared in detail" if Greece failed to reach a deal. The deadline comes after more than five months of talks aimed at renegotiating the country's bailout programme ended in deadlock.
Hong Kong equities plunged almost six percent Wednesday to a seven-month low as contagion from a rout in China spread into regional markets while traders are also buffeted by fears for Greece’s future in the eurozone.
It came as shares of Chinese oil giant Sinopec were suspended after more than 1,200 mainland firms stopped trading on Chinese bourses as mainland stocks suffered a precipitous fall that has wiped billions off valuations.
With Shanghai struggling, Chinese investors rushed to sell off shares on the Hong Kong exchange, which is closely linked.
“The main reason the Hong Kong market is going down is because these two markets (Shanghai and Hong Kong) have high correlation, with many mainland companies listed in both,” said financial analyst Castor Pang.
The Hang Seng Index tanked 5.84 percent, or 1,458.75 points, to 23,516.56 — its lowest close since the start of January. Turnover was a massive HK$235.97 billion (US$30.45 billion) as mainland investors frantically moved to cash out after piling into the market in recent months.
It had sunk as much as 8.18 percent at one point, its heaviest loss since October 2008 at the height of the global financial crisis.
The benchmark Shanghai Composite Index closed down 5.90 percent, or 219.93 points, to 3,507.19.
The Shenzhen Composite Index, which tracks China’s second exchange, dropped 2.50 percent, or 48.38 points, to 1,884.45.
Hong Kong was sent into orbit from the start of April when Chinese authorities relaxed rules on southbound trading for mainland investors using a stock link-up between the city’s exchange and Shanghai.
“A lot of Chinese investors who are trading through the stock connect are trying to withdraw money from Hong Kong,” said Pang, adding that share value in many smaller firms was dropping more than 20 percent a day.
– Fears of collapse –
There were also big losses around Asia, with Tokyo, Taipei and Sydney worst hit, while US-listed Chinese stocks also tumbled.
With a series of actions by Beijing to staunch the bloodletting, there are fears the market collapse will spread to the already struggling Chinese economy, the world’s second biggest and a key driver of global growth.
Shanghai is down more than 30 percent from its closing peak on June 12, when it had risen by more than 150 percent in 12 months in a borrowing-fuelled frenzy enhanced by hopes for economy-boosting government measures.
The Hang Seng China Enterprises Index — which tracks Chinese firms listed in Hong Kong — slumped 5.94 percent.
Shares in Sinopec were down 3.45 percent at HK$6.16 ($0.79) before trading was halted shortly after the break.
On Wednesday the chairman of the Hong Kong exchange, Chow Chung-kong, said it had “no intention to intervene in the market” but that the situation was being closely watched.
Traders are also nervously watching events in Europe, where leaders Tuesday gave Athens until the weekend to come up with a debt reform plan or be ejected from the currency union.
The move comes after Greece voted Sunday against another round of painful austerity they say has crippled the economy.
European Commission President Jean-Claude Juncker turned up the heat, warning “we have a Grexit scenario prepared in detail” if Greece failed to reach a deal. The deadline comes after more than five months of talks aimed at renegotiating the country’s bailout programme ended in deadlock.
