Hong Kong Stocks Sink Most Since 2011 on China

Hong Kong Exchanges & Clearing Ltd. tumbled 12 percent as of 1:33 p.m., on course for its biggest decline since October 2008, after Goldman Sachs Group Inc. recommended selling the shares. Haitong International Securities Group Ltd. slid 21 percent as mainland brokerages slumped. Internet company Tencent Holdings Ltd. fell 7.5 percent, dragging the city’s benchmark equity index lower.

The Hang Seng Index dropped 4.9 percent to 24,781.51, set for its worst loss since November 2011, on volume more than double its 30-day intraday average. The Hang Seng Index is down more than 12 percent from its recent high on April 28 and is headed for a so-called correction.

The Hang Seng China Enterprises Index fell 5.4 percent. China’s Shanghai Composite Index of mainland stocks, known as A shares, fell 0.2 percent, reversing gains of as much as 7.8 percent.

“Chinese investors are selling the Hong Kong market to channel the money back to A shares,” said Louis Tse, a Hong Kong-based director at VC Brokerage Ltd. “Investors anticipate more measures to support mainland shares. Realistically, it’s obvious that Hong Kong will lose out.”

The Hang Seng Index fell 4.5 percent in the three weeks through July 3, compared with a 29 percent dive by the Shanghai measure. Chinese authorities responded to the continuing rout by suspending initial public offerings and providing liquidity for margin trading. The Hang Seng China AH Premium Index jumped 10 percent on Monday, heading for the biggest increase since May 2006. The gauge signals dual-listed shares are 35 percent more expensive on mainland exchanges than in Hong Kong.