Hong Kong stocks dropped Wednesday, ending a three-day streak of gains , with health-related stocks leading the decline. The Hang Seng Index slumped 2.6 per cent to 21,008.34 at the close, ending a string of positive sessions that saw it gain 3.4 per cent. The loss was the biggest since June 13. The Hang Seng Tech Index shed 4.4 per cent, while the Shanghai Composite Index sank 1.2 per cent. Alibaba Health Information Technology and JD.com led the decline on the benchmark, retreating at least 6 per cent after the 21st Century Business Herald reported that China will increase scrutiny of online medicine sales . Li Auto bucked the decline on the broader market after Citigroup more than doubled its price target for the stock. The Hang Seng Index had risen 17 per cent through Tuesday since hitting a six-year low in March, thanks to China’s Covid-19 wave receding and new government policies to revive growth. The rebound added US$570 billion in market capitalisation, with Hong Kong unseating Japan to retake the position of the second-biggest stock market in Asia. “The rebound on Hong Kong stocks is expected to extend into the second half, with the easing of the headwinds such as the pandemic and the Russia-Ukraine conflict,” said Xu Guanghong, an analyst at Citic Securities. “China’s economic fundamentals have already hit the bottom and corporate earnings are also expected to rebound, given the pro-growth measures that have been enacted.” The hangover of policy tightening in the US still lingers on local stocks, with Fed officials reiterating that the central bank should raise the interest rate as fast as it can. Chair Jerome Powell is expected to defend the aggressive approach when he speaks in front of lawmakers on Wednesday. The risk of capital outflows from Hong Kong is building up amid higher US dollar rates. The Hong Kong dollar has been trading close to 7.85 against the greenback over the past week, a level that has prompted the city’s monetary authority to intervene, spending HK$78.1 billion (US$10 billion) so far this month to defend the local currency. Among the index heavyweights, Alibaba Group Holding lost 4.1 per cent to HK$101.50, and Tencent Holdings slipped 2.9 per cent to HK$370. Li Auto, which just launched a new SUV model , advanced 2.6 per cent to HK$140.90 after Citigroup boosted its share-price estimate for the company by 110 per cent to HK$225.30. Competing car maker Nio also rose, adding 0.2 per cent to HK$175.50. Mega Genomics, which provides a genetic testing service, closed unchanged at HK$18 on its first day of trading in Hong Kong. On the mainland-China exchanges, four new stocks all gained between 36 and 45 per cent. Shanghai National Center of Testing and Inspection for Electric Cable and Wire was the best performer, surging to 48.57 yuan in Shenzhen.