THE Hang Seng Index crashed to a 14-month low yesterday as investors retreated from volatile stocks to higher-yielding bonds and deposits. The sell-off saw the index plummet 209 points to close 2.48 per cent down at 8,221.57, the lowest level this year. At one stage it fell as low as 8,135.64, but some late-afternoon buying out of London helped it recover part of the lost ground. The last time the market closed this low was on October 11 last year when it stood at 8,192.18. Property stocks were the hardest hit, with Sun Hung Kai down $1.30 to $48.20, and Cheung Kong down 70 cents to $31.10. A one per cent drop on Wall Street on Thursday precipitated the fall on most world markets yesterday, but Hong Kong was by far the worst-affected. Yesterday Singapore lost 1.8 per cent, Kuala Lumpur was down 0.85 per cent, and Thailand was off 2.44 per cent. But it was the big fall in Hong Kong that took analysts by surprise. The index has now fallen 14 per cent in the past 13 days, and so far there has been no sign of a turnaround. Mutual funds are believed to be behind most of the selling, while concerns over the Chinese economy continue to haunt the market. Faced with massive redemptions from their clients, the larger mutual funds are now liquidating their stock positions to meet the cash payouts. Asian funds have been among the worst-performing this year and Hong Kong is bearing the brunt of the selling through the futures market. Yesterday almost $7 billion worth of futures contracts were traded, compared with just $4.1 billion in the cash market. 'There was definitely some real selling going on; this was not just a reaction to Wall Street,' said one broker. 'We are seeing a lot of mutual-fund selling and redemptions are happening.' Brokers are unwilling to hazard a guess as to when the market will turn around. Baring Securities director James Osborn said that while long-term investors were beginning to buy, sentiment was still very negative and the market could fall further.