THE Hang Seng Index dived 3.1 per cent, or 331.21 points, to close at 10,432.02 yesterday as Governor Chris Patten's reform proposals brought a swift and strong rebuke from China.
In London trading last night, the Robert Fleming Index, which tracks Hong Kong stock prices there, was down a further 238 points to 10,194.
Brokers have recently regarded 10,200 as a support level for the market, and suggested that if this were broken the index might well slip below the 10,000 mark.
Market makers had expected a response from China over the passing of the electoral reforms, but were surprised by the speed and severity of the response.
Just hours after the reform bill was passed by Legco, Xinhua (the New China News Agency) said the Governor had ''slammed the door shut on further negotiations,'' ending hopes of an agreement between the two sides.
Salomon Brothers vice-president David Williamson said: ''By responding quickly and strongly China has made overseas investors nervous in the short term.'' Peregrine sales director Chris Malpass said the political developments were not a surprise, but the two sides seemed diametrically opposed.