Hong Kong's Hang Seng index drops nearly 2% on tech rout

Hong Kong shares fell on Monday after the US Senate passed a $1.9 trillion stimulus bill, raising inflation worries, while a low economic growth target in China prompted fears of tighter policy to rein in lofty valuations.

At the close of trade, the Hang Seng index was down 557.46 points, or 1.92%, at 28,540.83.

The Hang Seng China Enterprises index fell 2.46% to 11,014.79.

Tech shares slumped 6.4% and the IT sector fell 5.91%, dragging the broader index lower.

Those falls outweighed gains in energy shares, which rose 1.6% on higher oil prices, while the financial sector ended 0.29% higher and the property sector rose 0.26%.

China on Friday set a modest annual economic growth target, at above 6%, which was significantly below the consensus of analysts, who expect growth could beat 8% this year.

While some analysts saw the conservative target as an indication policymakers could take action to curb asset bubbles, others took a more sanguine view.

"Our outlook for further cyclical upside remains intact as global re-opening is being helped by vaccination," Wendy Liu, head of China Strategy at UBS Global Research, said in a note.

"We believe the current phase of consolidation may conclude when the so-called core growth companies (test) their respective 100-day or 200-day moving averages and their growth prospects are re-confirmed during the upcoming results season," she said.

China's main Shanghai Composite index closed down 2.3% at 3,421.41, while the blue-chip CSI300 index ended down 3.47%.

The yuan was quoted at 6.5209 per US dollar at 08:08 GMT, 0.38% weaker than the previous close of 6.4965.

About 4.91 billion Hang Seng index shares were traded, roughly 164.4% of the market's 30-day moving average of 2.98 billion shares a day.