Update | Hang Seng Index posts biggest monthly loss since 2016

Hong Kong stocks declined for a second day on Wednesday led by banks and insurers, and the city’s benchmark gauge recorded its biggest monthly decline in two years. Lower than expected China PMI data and mounting concerns that the US Federal Reserve will this year conduct more interest rate increases than expected weighed on stocks.

The Hang Seng Index dropped by 1.36 per cent, or 423.94 points, to 30,844.72. The gauge slid by 6.21 per cent in February, its worst monthly performance since January 2016. The Hang Seng China Enterprises Index, or the H-share gauge, shed 2.09 per cent, or 264.46 points, to 12,382.08.

The Shanghai Composite Index also slumped as traders continued to offload holdings in big-caps for hefty gains.

Equities in the two markets retreated after the purchasing managers’ index for China’s manufacturing industry fell the most in five years in February. The gauge fell to 50.3 from 51.3 in January, the statistics bureau said on Wednesday. The data might be subject to seasonal distortion as Lunar New Year, which fell in February this year, slowed output and exports.

Major stock markets in Asia also retreated on Wednesday after a testimony by the Fed chairman, Jerome Powell, suggested the US central bank could rethink its plan for three interest rate increases this year and potentially add a fourth.

The Dow Jones Industrial Average and the S&P 500 Index dropped by more than 1 per cent in overnight trading.