Hang Seng Index slumps to five-month low while markets worldwide retreat over growth worries Hong Kong stocks tumbled to a five-month low yesterday on concern that accelerating inflation will lead central banks worldwide to raise interest rates, slowing world growth and threatening the territory's export-dependent economy. The Hang Seng Index chalked up its second-biggest percentage decline of the year, part of a worldwide retreat that saw emerging market stocks fall to more than six-month lows. The benchmark slid 2.47 per cent to finish 387.02 points lower at 15,234.42. The slide was triggered by mounting concern that central banks in the United States and Britain were poised to raise rates in the face of signs that inflation is accelerating. Traders are especially on edge on the eve of back-to-back reports from the US on producer and consumer price inflation. The Hang Seng Index fell as many as 416.58 points during the day, with China Mobile and HSBC Holdings between them accounting for 180.56 points of the decline at the close. China Mobile dived 4.71 per cent to $39.45 while HSBC dipped 1.26 per cent to $132.30. Hong Kong-traded mainland stocks fared even worse, dropping 264.4 points or 4.25 per cent to 5,953.94 - the lowest close in almost six months. China Life Insurance fell 6.72 per cent to $10.40 while PetroChina dived 4.6 per cent to $7.25. The falls were accentuated by fund managers seeking to book profits on mainland stocks to offset losses elsewhere. Turnover jumped to $35.6 billion from Monday's $23.28 billion. Investors worry that the world's leading central banks would simultaneously raise rates, 'reversing the availability of cheap bank loans', said Credit Suisse chief strategist Arjuna Mahendran. 'This led to a sharp weakening of the US dollar against all major currencies and has raised fears that investors, who borrowed in yen and Swiss francs at low interest rates to buy bonds in Australia and New Zealand and equities in emerging markets, were losing their money due to currency movements.' Mr Mahendran does not think the recent rout in stocks portends a full-fledged bear market. 'This is simply a healthy correction in a multi-year bull market cycle,' he said. 'Once it is established that global growth is still reasonably high and inflation can be controlled, the bulls will re-enter the market, perhaps by September.' Japan's Nikkei-225 Index fared worst in the region, tumbling 614.41 points or 4.14 per cent to finish at 14,218.6. This is the biggest point decline since September 12, 2001, in the wake of the terrorist attacks on the US. South Korea's Composite Index fell 2.9 per cent while Taiwan's Weighted Index dropped 1.64 per cent. The Shenzhen Composite Index, however, bucked the trend to finish 0.33 per cent higher.