The benchmark Hang Seng index fell 0.9 percent to 22,661.6 on Wednesday. Any near-term bounce is likely to be capped by the index's 200-day moving average, currently at 23,099.8.
Stocks on Wall Street extended their losing streak, barely clinging on to gains on the year, on worries over a slowing U.S. economy.
Oil prices jumped after Organization of the Petroleum Exporting Countries talks broke down as Saudi Arabia failed to convince other members to lift production.
Those gains could lift shares of Chinese oil producers such as Petrochina and CNOOC, which have tracked the broader markets lower over the past week.
Chinese auto stocks such Geely and Great Wall Motor could also see buying interest on reports that China will reintroduce a "cash-for-vehicles" programme to remove old vehicles from its roads.
However, financials, which have the biggest weights on benchmark indices in Hong Kong and Shanghai, could remain on the back-foot and hold back the market despite attractive valuations, as concerns over fund raising and the expiry of lock-ups for institutional investors are raised again.
China Construction Bank and Agricultural Bank of China were the third and fifth top shorted stocks on Wednesday in terms of value shorted as a percentage of total turnover.
Copyright Reuters, 2011