Hong Kong stocks fell, snapping a three-day advance, as default by China Evergrande Group and Kaisa Group put about US$30 billion of bonds at risk of haircuts while China weakened its currency from a three-year high. The Hang Seng Index slipped 1.1 per cent to 23,995.72 at the close on Friday. The losses trimmed the benchmark’s advance to 1 per cent this week, aided by China’s liquidity injection plan. The Tech Index also retreated 1.1 per cent while China’s Shanghai Composite Index dropped 0.2 per cent. Alibaba Health Information Technology and biopharmaceutical group WuXi Biologics slid at least 4.3 per cent. Among Chinese developers, Evergrande tumbled 1.7 per cent while Sunac China slid 2 per cent. Fitch Ratings on Thursday declared Evergrande and Kaisa in default after they failed to repay offshore bondholders. The failures could trigger a cross-default in debt owed by the two developers. Evergrande has US$19 billion of dollar bonds outstanding while Kaisa owes US$11.6 billion, according to Bloomberg data. “Restraints such as the regulatory crackdown and the debt crisis of Chinese developers continue to weigh on Hong Kong stocks,” Central China Securities said in a report. The Omicron variant also piled on market concerns, it added. Elsewhere, the offshore yuan fell to as low as 6.3893 per dollar, the weakest level this month, after China’s central bank raised the reserve requirement ratio on foreign currencies for a second time this year. The Chinese currency has strengthened 2 per cent this year to a three-year high. Before Friday’s pullback, the Hang Seng Index had recouped some US$130 billion of market value on policy easing bets. China’s central bank will cut banks’ reserve ratio starting December 15, infusing 1.3 trillion (US$188 billion) into the system. China’s top leaders are set to kick off the annual Central Economic Work Conference this month, with traders eyeing signals on how far Beijing will dial back its policy tightening measures amid growth slowdown. A central bank report late Thursday showed that a measure of credit growth accelerated last month. Overseas traders have loaded up on onshore stocks for the past eight days on policy easing bets. They bought 21.7 billion yuan worth of shares through the Stock Connect on Thursday, matching the record daily inflow in May, according to Bloomberg data. Net buying amounted to 9.1 billion yuan on Friday. Investors should take precaution as Chinese stocks face a sell-off over the next two quarters as Beijing refrains from activating full-scale stimulus while it stays the course on structural reform of the economy, BCA Research said in a report. Three companies started to trading in Hong Kong. Canbridge Pharmaceuticals slumped 27 per cent and drug maker Asymchem Laboratories slipped 4.6 per cent. Gushengtang Holdings, a Chinese medical service provider, was unchanged. Other Asia-Pacific markets all declined on Friday, tracking overnight losses in US equities, on renewed concerns about the Omicron variant’s threat to economies. A study found that the Covid-19 strain is 4.2 times more infectious than the Delta in its early stages of transmission.