Hong Kong stocks plunged 4 per cent after the local stock market opened on Monday, as investors continued the sell-off late last week, and Asian markets reacted to the downgrading of the US credit rating before the weekend.
The benchmark Hang Seng index was down 4.15 per cent to 20,077.79 points shortly after 11:00 am (0300 GMT).
Analysts said investors were spooked by Standard & Poor’s decision to downgrade the United States credit rating on fears of spiralling national debt.
The agency downgraded the rating of U.S. long-term debt on Friday from the top level of AAA by one notch to AA+ on Friday.
John Tsang, Hong Kong’s financial secretary, said he thought the downgrading would have little impact on U.S. treasury yields, the U.S. dollar or Hong Kong’s economy.
Ken Cambie, chief financial officer at shipping and property group Orient Overseas International, said he doubted the US was heading for a double-dip recession.
Speaking at the Hong Kong listed firm’s results briefing on Monday morning, Cambie said the U.S. economy was still growing, albeit modestly.