Hong Kong stocks sank the most since 2012 amid speculation Chinese investors were shifting money out of the city’s market, and as Greece’s rejection of austerity measures spurred equity declines across Asia.
Hong Kong Exchanges & Clearing Ltd. tumbled 9.6 percent at the close, the most since October 2008, after Goldman Sachs Group Inc. recommended selling the shares. Haitong International Securities Group Ltd. slid 13 percent as mainland brokerages slumped. Internet company Tencent Holdings Ltd. fell 5.5 percent, the biggest drag on the city’s equities benchmark.
The Hang Seng Index dropped 3.2 percent to 25,236.28, its steepest loss since May 2012, on volume 69 percent greater than its 30-day average. The measure has declined 11 percent from its recent peak on April 28, entering a so-called correction. The Hang Seng China Enterprises Index fell 3 percent. China’s Shanghai Composite Index of mainland stocks, known as A shares, rose 2.4 percent, paring gains of as much as 7.8 percent.
“Chinese investors are selling the Hong Kong market to channel the money back to A shares,” said Louis Tse, a Hong Kong-based director at VC Brokerage Ltd. “Investors anticipate more measures to support mainland shares. Realistically, it’s obvious that Hong Kong will lose out.”
The Hang Seng Index fell 4.5 percent in the three weeks through July 3, compared with a 29 percent dive by the Shanghai measure. Chinese authorities responded to the continuing rout by suspending initial public offerings and providing liquidity for margin trading. The Hang Seng China AH Premium Index jumped 10 percent on Monday, the biggest increase on record. The gauge signals dual-listed shares are 37 percent more expensive on mainland exchanges than in Hong Kong.
Hong Kong stocks, which are freely traded by foreign investors and more susceptible to global sentiment than mainland shares, also fell after Greek voters said no to austerity. Sixty-one percent backed Prime Minister Alexis Tsipras’s rejection of further spending cuts and tax increases in an unprecedented referendum that’s also taken the country to the brink of financial collapse. The results mean Greece exiting the currency union is now the base scenario, JPMorgan Chase & Co. said.
Futures on the Standard & Poor’s 500 Index lost 0.7 percent and Asia’s benchmark equity gauge fell 2 percent, headed for its biggest drop since February 2014.