Led by declines in property shares, Hong Kong’s benchmark Hang Seng index fell 1.8 percent. Shares across the rest of Asia followed suit, with MSCI’s broadest index of Asia-Pacific shares outside Japan falling 1.03 percent to their lowest in more than a week.
Japan’s Nikkei 225 index slipped almost one percent, moving further away from its 13-month high reached a week ago.
Protesters in Hong Kong paralysed parts of the Asian financial hub for a third day, after the city’s embattled leader, Carrie Lam, said that they were being “extremely selfish”.
Swings in Hong Kong stocks are now becoming more extreme, with some traders rushing to profit from the increased volatility. The death of a protester over the weekend, injuries due to police gunfire on Monday and increasing violence in general, are heightening a sense of unease in Hong Kong, traders said.
Travel disruptions continued on Wednesday, after a night in which students clashed repeatedly with police at a university, roads were blocked and fires set across the city. Trains were not stopping at nearly two dozen stations on Wednesday morning.
Chinese state media condemned the violence, with the China Daily newspaper stating that young protesters were revelling in a “hormone-fuelled ‘rebellion'”.
Financial markets were also clouded by uncertainty over the outcome of US-China trade talks. US President Donald Trump said a trade deal was “close” but gave no new details on when or where an agreement would be signed, disappointing investors in what was billed as a significant speech on his administration’s economic policies.
Shares in Shanghai hit their lowest close in more than six weeks on Wednesday, with the index of China’s biggest 300 companies ending 0.1 percent lower and the Shanghai Composite Index falling 0.3 percent to its lowest close since September 30.
“I’m absolutely concerned. The clock is ticking,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“Markets are now expecting substantial progress in the next week or so, and if not, then confidence could crumble. There are diverging interpretations of Trump’s comments. I tend to go with commodities like oil and copper because they are plugged into global demand, so their fall is significant.”
Amid increasing pressure on the world’s second-largest economy, Chinese Premier Li Keqiang said China will use local government special bonds to support the economy.
Shares of the company that operates Hong Kong’s stock exchange, Hong Kong Exchanges and Clearing Ltd, slipped 2.1 percent due to concerns that continuing unrest in the city will cripple trading volume.
Speculation also circulated around trading Hong Kong’s floors that Chinese e-commerce giant Alibaba Group Holding Ltd. may not be able to complete its share sale in the city, even after media reports that it had won approval to proceed with the listing.
“Hong Kong is in jeopardy and no one is very confident about the economy,” said Castor Pang, head of research at Core Pacific-Yamaichi International. “That’s hurting trading volume because sentiment is bad.”