Risk-off sentiment prevailed in the Hong Kong and mainland China stock markets on Wednesday, following news overnight of an impeachment inquiry against US President Donald Trump, leading to the Hang Seng’s biggest daily decline in a month. The Hong Kong benchmark closed 1.28 per cent lower at 25,945.35, dragged down by a broad decline across sectors – the usually safe health care stocks and technology shares were among the biggest losers. Wednesday’s drop was the index’s biggest since August 26 this year, when it fell by 1.9 per cent. Index heavyweight Sino Biopharmaceutical Limited plunged by 5.3 per cent to HK$9.9, while CSPC Pharmaceutical Group lost 3.8 per cent to HK$15.6. The declines came as analysts at Moody’s Investor Service said on Wednesday China’s ongoing reform of bulk purchase of drugs will boost sales of drug makers, but might squeeze their profits as competition to be included in a purchase list could lead to a price war. Among the technology heavyweights to decline on Wednesday were Xiaomi, the world’s fourth-largest smartphone maker, as well as Apple supplier AAC Technologies, which dropped 4.4 per cent to HK$8.9 and 3.5 per cent to HK$41.8, respectively. Chinese social media and gaming giant Tencent Holdings was another casualty, dropping 2.1 per cent to HK$328.6. “The [Trump] impeachment hearing certainly brings a negative flow of news headlines. But we do not expect it to introduce a fundamental change to the Hong Kong market,” said Kevin Leung, executive director of investment strategy at Haitong International Securities. He said profit taking had continued for about two weeks after the Hang Seng Index hit the 27,000 level, and suggested investors avoid sectors more closely related to the trade talks, such as technology and manufacturing. Defensive sectors included health care, mainland consumption and education, he said. “If there can be any uptick catalyst to push the market higher, it could be consumer data related to the mainland October Golden Week,” he added. Analysts at RBC Capital Markets called the impeachment inquiry, announced by House Speaker Nancy Pelosi, “a small step”, but one that had triggered a sell-off in risk assets and the US dollar. “We would note that this is only a small step on the road to impeachment, which would ultimately require a 2/3 majority in the Republican-controlled senate and that it is not clear yet whether the House will vote to endorse the inquiry … leading to charges against Trump,” they said in a note on Wednesday. In mainland China, the benchmark Shanghai Composite Index closed 1 per cent down at 2,955.4. The Shenzhen Component Index dropped 1.4 per cent to 9671.1 and the technology-heavy ChiNext fell1.3 per cent to 1672.7. The banking sector held out above water, while telecommunications, electronics and equipment makers led the declines.