HONG KONG: Shares tumbled in Hong Kong Thursday, led by property firms, after the Federal Reserve lifted interest rates and indicated a further three hikes are likely next year.
The Hang Seng Index dived 1.77 percent, or 397.22 points, to 22,059.40 at the close.
And the benchmark Shanghai Composite Index fell 0.73 percent, or 22.85 points, to 3,117.68 but the Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.67 percent, or 13.05 points, to 1,972.91.
The Hong Kong Monetary Authority followed the Fed and hiked interest rates in the city, putting an extra strain on the city's already troubled economy and almost certainly ramping up repayments for homeowners.
The de facto central bank hiked rates to one percent from 0.75 percent to maintain its decades-old currency peg to the US dollar.
The move comes as the financial hub struggles with slowing growth in China's economy that has led to falling visitor numbers from the mainland, which has in turn hurt the crucial retail sector. Retail sales have tumbled for 20 successive months.
At the same time the property market, one of the most expensive on the planet, is under pressure after the government unveiled fresh curbs to cool prices, including last month's hike in stamp duty.
This in turn has led to worries about slackening demand, hammering developers and real estate firms.
"The increase in interest rates will also have a negative effect on Hong Kong's property stocks," said Jackson Wong, a securities analyst at Huarong International.
Cheung Kong Property fell 2.43 percent to HK$50.25, while New World Development tumbled 2.80 percent to HK$8.33.
Sino Land sank 2.35 percent to HK$11.66 and Hang Lung Properties fell 3.11 percent to HK$16.82.
Wong added the rate hike was causing China's 10-year bonds to tumble, and the mainland's banks were "performing a lot worse than the overall market" over concerns Beijing is stepping up efforts to curb capital outflows.
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