Hang Seng falls 1.6pc, China shares outperform

Hong Kong shares fell for the first time in three days on Wednesday, in line with a broader sell-off in high yielding counters including property, as strong US data fanned speculation that the Federal Reserve may taper its bond buying programme.

The Hang Seng Index and China Enterprises Index of the top Chinese listings in Hong Kong each fell 1.6 per cent. The Hang Seng benchmark dipped back into negative for the year, now down 0.5 per cent in 2013, compared to the 6 per cent slide on the H-share index.

In the mainland, the CSI300 of the leading Shanghai and Shenzhen A-share listings ended down 0.1 per cent, while the Shanghai Composite Index closed up 0.1 per cent at 2,642.6 points.

Shanghai volumes stayed robust, while turnover in Hong Kong climbed to its highest since last Thursday. Real estate investment trusts (REITs), which were beneficiaries of inflows from waves of central bank easing, accounted for a sizeable portion.

US Treasury yields surged to their highest levels in over a year on Tuesday after sturdy home price data and a strong consumer confidence report pointed to a more entrenched recovery in the world’s largest economy.

“Hong Kong will suffer if there’s a risk reversal, when funds flow out as the US economy improves,” said Hong Hao, chief strategist at Bank of Communication International.