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Hong Kong - Hong Kong shares ended at a seven-month low in weak trade on Tuesday, breaking below chart support, as investors exited some high-yielding stocks such as local property developers ahead of the Dragon Boat Festival holiday.
A fresh spike in US interest rates re-ignited concerns about capital flows from emerging Asia, hitting equities and currency markets and forced investors to pare their Asian portfolios.
The Hang Seng Index slid 1.2% to 21 354.7, breaking below an April trough to close at its lowest since November 20. Losses exceeding 9% from its May 20 peak have sunk the benchmark to its most technically oversold levels in a year.
The China Enterprises Index of the leading Chinese listings in Hong Kong shed 1.7%. On the year, the Hang Seng Index is down 5.7%, while the H-share index has dived 12.9%.
Tuesday's turnover was below average for a seventh session, with short selling accounting for 12.6 percent of total turnover, compared with a historical 8% average. Mainland China is shut June 10 to 12, with Hong Kong also closed on Wednesday. Both markets will resume trading on Thursday.
"People are cutting risk ahead of the holiday and unsure about how mainland markets will react when they reopen on Thursday after the soft data over the weekend," said Kelvin Wong, Julius Baer's China and Hong Kong equities analyst.
Data over the weekend had shown China inflation, bank-lending growth and investment were below expectations in May, while factory output and retail sales rose around the same pace as in April.
But upbeat comments from China Premier Li Keqiang suggest Beijing will abstain from fiscal stimulus, particularly since the new central leadership has reportedly lowered their acceptable rate of annual growth to 7%.
On Tuesday, growth-sensitive counters from Chinese banks to coal and cement producers were weaker. China National Building Material (CNBM) sank 3.2% to a nine-month low.
Deutsche Bank analysts said in a Tuesday note that interest in Chinese cement stocks is at its weakest in five years. With cement prices in the mainland likely to disappoint in the third quarter, share price weakness could persist.
The Macau gaming sector, among recent outperformers, was broadly lower after revenue data from the first week of June came in weaker than expected.
MGM China was knocked off a record closing high, tumbling 6.7% on concerns that revenue growth for the full month of June could underwhelm. Its shares had surged 7.7% on Monday ahead of the data.
Barclays analysts said it could be too early to call this slowdown the beginning of a trend, attributing the unexpected revenue growth weakness to the timing of holidays in June. They are expecting a pick-up later in the month.
Property index sinks into abyss
Investors sold off defensive, high-yielding names on fears of being caught short by more developments surrounding a potential tapering of US monetary stimulus with Hong Kong shut on Wednesday.
Hong Kong media also reported that a committee at the Chinese territory's defacto central bank warned that a sharp correction in the US bond market would affect Hong Kong's financial stability and local economy.
The Hang Seng Properties Index, of which Hong Kong developers account for seven of nine components, was the standout sectoral underperformer, diving 2.5% in its 10th-straight daily loss.
New World Development dived 5% to its lowest since September and has now plummetted 23% from highs in May.
Link Real Estate Investment Trust (REIT) fell 3.9% on the day and is now down more than 4 percent in 2013 after posting double-digit gains in the previous four years.
