The Hang Seng Index saw its fourth straight day of losses yesterday, led by yet another steep drop for the beleaguered Sun Hung Kai Properties. The key index slid 0.16 per cent to 20522.26 while Sun Hung Kai Properties fell 2.18 per cent to close at HK$94.4, topping the mainboard in terms of turnover. The stock has lost 13.14 per cent since Friday, when it resumed trading. Analysts said the high-profile arrest of Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen took local and international investors by surprise and raised concerns about the quality of corporate governance of family-owned blue chips in Hong Kong. Developers make up 8 per cent of the HSI weighting. Most blue-chip property development companies in the city are family-owned, including Cheung Kong, Henderson Land Development and New World Development. Trade has dried up considerably in the Hong Kong bourse as investors tread cautiously. The daily turnover of the main board only reached HK$45.5 billion yesterday, compared with the average of HK$62.5 billion in the first two months of this year. Arthur Kwong, head of Asia-Pacific equities at BNP Paribas, said concerns over property developers and uncertainties over the city's property policies would continue to cast a shadow over the index. International institutional investors, in particular, would avoid investing in companies that had corporate governance concerns or ongoing lawsuits, Kwong said. According to Kwong, concerns over mainland banks' non-performing loans would also weigh down the stock index, which is dominated by these banks. The recent spate of resignations of auditors at small and medium-sized enterprises on the mainland would also continue to spook investors, although SMEs did not figure in the H-share index, he said. The Hang Seng China Enterprises Index, or the H-share index, yesterday outperformed the HSI marginally as it edged up 0.17 per cent to close at 10,658.76. But, Jonathan Garner, chief emerging markets and Asia strategist at Morgan Stanley, was more upbeat on mainland shares, both on the H-share and yuan-denominated A-share markets. In a research note published yesterday, Garner predicted the H-share index should gain 26 per cent to reach 13,400 by the end of this year, while the MSCI China index could rise 20 per cent to 70. The HIS is expected to gain 15 per cent to 23,600. Garner said H shares were being 'unusually discounted' because of the overhang of hard-landing concerns for the mainland economy, as the index was trading at a price-earning ratio lower than the Hang Seng Index. He said mainland stocks would do better as they benefited from a policy easing, robust economic growth on the mainland and the eventual change of market perception about China's economy. Morgan Stanley has raised its forecast for the mainland's GDP growth this year from 8.4 per cent to 9 per cent. The key Shanghai stock index yesterday rose 0.5 per cent to 2,262.78.