All of Hong Kong's 33 benchmark stocks declined yesterday as the Hang Seng Index recorded its biggest single-day decline since July last year. Behind the slump, said analysts, were expectations of a prolonged cycle of rising interest rates. While morning trading was flat, a sell-down that started at noon and snowballed after the midday break saw the blue-chip index shed 323.75 points, or 2.17 per cent, to close at 14,575.02, with China Mobile leading the losers to close down 4.2 per cent at $34.10 and contribute 94.17 points, to the index's fall. Minutes from a September 20 policy meeting of the United States Federal Reserve released on Tuesday did little to allay investors' fears and confirmed that more interest-rate increases are likely in the coming months. Meanwhile, local interest rates, which generally mirror US rates because of the Hong Kong dollar's peg to the greenback, continued to reach new four-year highs. The benchmark three-month Hong Kong interbank offered rate (Hibor) was up 0.08 point at 4.42 per cent yesterday. The Hibor has risen sharply this year, making it increasingly expensive for lenders to secure funding. And an exodus of speculative funds since Beijing revalued the yuan on July 21 has tightened liquidity in the market even further. Shares in blue-chip banks declined yesterday, despite a midday announcement by Chief Executive Donald Tsang Yam-kuen in his inaugural policy address that Beijing had agreed to widen the scope of the yuan-denominated business that local lenders are permitted to conduct. Index heavyweight HSBC fell 1.45 per cent to close at $122.10, a three-month low. BOC dropped 1.96 per cent and Bank of East Asia shed 0.66 per cent, to close at $15 and $22.60, respectively. Property developers were likewise clobbered yesterday, as rate rises fanned fears of an exacerbated slowdown in the real estate market. The Hang Seng property sub-index outpaced the broader index with a decline of 2.42 per cent, closing 445.91 points lower at 17,969.29. Cheung Kong led the way with a 2.75 per cent drop to $81.20. Henderson Land fell 2.58 per cent to close at $35.85 and Sun Hung Kai Properties dipped 2.28 per cent to settle at $75.05. H shares also fell. Of the 40 companies' shares tracked by the Hang Seng China Enterprises Index, 33 finished lower, while four rose and three were unchanged. The index shed 1.47 per cent to close at 5,029.51 points. Heavyweight PetroChina dropped 1.6 per cent to $6.15, China Life Insurance was down 2.54 per cent at $5.75 and China Telecom fell 2.63 per cent to close at $2.775. Rising against the tide were Bank of Communications, which gained 0.76 per cent to close at $3.30, and refiner Sinopec Zhenhai, up 1.16 per cent, ending the day at $8.70. The market widely expects the US Federal Reserve to continue to raise interest rates at its next meeting on November 1, and again at the following meeting on December 13.