Sell-off puts Hong Kong stocks on longest skid in 4½ years

Yesterday marked the longest losing streak in 4½ years for Hong Kong stocks amid concerns that slowing growth and a worsening credit crunch on the mainland would hit earnings.

"Nothing is positive right now and the valuation is not the lowest yet," said Alma Yang, a portfolio manager at Shenyin Wanguo Asset Management, adding cyclical shares like oil and coal producers may fall a further 20 per cent.

The Hang Seng Index fell by up to 412 points to slip below the psychologically important level of 20,000 in the morning, but climbed back to finish 0.59 per cent lower at 20,263.31.

UOB Kay Hian strategist Steven Leung said 20,000 was a "resistance level", but it would be breached if the US bond yield rises further in the near term.

The US Federal Reserve cut its unemployment rate forecast by about 0.2 percentage point this week, triggering speculation Washington would start tapering its asset-buying programme in December. That, in turn, sparked a global sell-off in equities and gold as investors moved capital into US Treasury bonds as bond yields rose sharply.

Yesterday's slide extended the HSI's decline to a sixth consecutive week. The week's 3.37 per cent drop marked its longest losing streak since October 2008.