Hong Kong's stock index tumbled 5 percent Tuesday, tracking Wall Street's overnight plunge with investors spooked by a dismal economic outlook.
The blue chip Hang Seng index dropped 702.99 points, or 5 percent, to 13,405.85, snapping a five-day winning streak. The benchmark index gained 9.7 percent last week.
Improved investor confidence was eroded after a new slew of weak economic indicators in the U.S. was released and the National Bureau of Economic Research said the world's largest economy has been in recession since December 2007.
The Dow Jones industrial average dived 679.95 points, or 7.7 percent, to 8,149.09 on Monday.
Analysts said the local market will continue with its downward trend this week, especially after it had risen for five consecutive trading sessions.
"Investors have already made some short-term profits, so they locked in gains as soon as the market went down. They don't want to stay in the market for too long," said Ernie Hon, an analyst from ICEA Securities.
Hon said sentiment is traditionally better in December which he believed would lend some upward momentum to the market.
Stocks in many sectors slid with heavyweight HSBC losing 6.4 percent to 79 Hong Kong dollars.
China's top lender ICBC shed 3.8 percent to HK$3.80 and China Construction Bank fell 4.2 percent to HK$4.10. Insurer China Life lost 4.2 percent to HK$19.60.
Property developers dipped after HSBC raised its local mortgage rates. Sun Hung Kai Properties dropped 5.5 percent to HK$58.80. Sino Land plummeted 9.6 percent to HK$5.50 while Cheung Kong (Holdings) Ltd. was off 2.5 percent to HK$69.70.
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