Hang Seng falls amid concerns of looming Fed rate rise
Worries Federal Reserve may raise borrowing costs sooner than expected prompt investors to cash out on positive mainland economic data
The Hang Seng Index posted its biggest single-day fall since February on fears the United States Federal Reserve may raise interest rates sooner than expected.
The sell-off also came a week after the market reached a six-year high on positive economic data on the mainland.
The blue-chip index dropped 1.93 per cent to close at 24,705.36 points, falling below the 25,000 psychological level for the first time in a week.
The H-share index fell 2.55 per cent to 11,117.89 points.
The sell-off was triggered by a report that the Federal Reserve Bank of San Francisco hinted markets might be underestimating the pace at which interest rates might rise.
The selling spree was also fuelled by Premier Li Keqiang's comments on Tuesday the nation's money supply fell to a five-month low last month and ruled out the possibility of loosening credit supply.
"The market overreacted … I think [Fed chairman Janet] Yellen still prefers to tighten at a gradual pace, as employment is not strong and core inflation remains low in the US," said Khiem Do, the head of Asian Multi-Asset at Baring Asset Management.