Hong Kong stocks got off to a poor start in the Year of the Horse as the market crashed to its lowest point in seven months, joining others in a region-wide meltdown over fears Beijing will tighten credit and the United States will further taper its stimulus. The Hang Seng Index lost 2.9 per cent, or 637.65 points, to close at 21,397.77, its lowest level since July. The sharp drop made it the worst opening day of trading in a lunar new year since 2008, raising fears that it portends a year of losses. "The Hang Seng Index will gallop between 20,000 and 24,000, just like a horse, in the new year," said Ben Kwong, chief operating officer at KGI Asia. The last three Years of the Horse have been a mixed bag. In 2002, the index lost 18.2 per cent, in 1990 it gained 6.63 per cent, and in 1978 it rose 22.6 per cent. Hong Kong was not alone in taking a beating yesterday. The Japanese market, which posted impressive gains last year amid optimism over Abenomics, plunged the most in the Asia-Pacific region, with the Nikkei 225 Index losing 4.2 per cent to close at its lowest level since June. The MSCI Asia-Pacific Index has lost more than US$538 billion so far this year in terms of market capitalisation of the region's blue-chip stocks. Adding to the persistent weakness, US$2 billion left the area's equity markets in the week to January 29, according to US brokerage firm Jefferies. Data showing US factory expansion at its slowest pace in eight months in January and that in China at a six-month low added to concerns that a tapering of the US Federal Reserve's bond buying would lead to a flight of capital from developing and emerging markets. The Fed's US$85-billion-a-month quantitative easing programme has been trimmed to US$65 billion and is expected to be cut further in the coming months. Mutual funds and exchange-traded funds, which track stock indexes, have been net sellers of Hong Kong equities for eight straight weeks, pulling out US$691 million from the local market, according to Jefferies. Chan Ka-keung, secretary for financial services and the treasury, was unfazed by the crash, saying he expected the city to do better than last year. "The US and European markets are generally fine and Hong Kong's fundamentals don't look bad. But investors should watch out for the volatility resulting from the Fed's pace of exiting the quantitative easing scheme," said Chan at a stock exchange event to mark the opening of trading in the new lunar year. The mainland stock markets, among the worst performers in recent years, are expected to follow the regional decline when they resume trading on Friday following weak manufacturing and service sector data.