Hong Kong stocks fell to their lowest level since the global financial crisis after a major speech by the city’s leader on Wednesday.
The benchmark Hang Seng index fell more than 3% to its lowest level since May 2009 before regaining some ground.
Investors are also concerned about the risk of a global economic slowdown as central banks around the world hike interest rates to counter rising prices.
A financial expert told the BBC that “panic selling is ridiculous”.
In his first policy address yesterday, Hong Kong Chief Executive John Lee announced measures to increase security and plans to attract more foreign talent to the area.
However, he did not elaborate on economic goals for the city, which has lost ground to competing Asian financial centers like Singapore.
Hong Kong’s economy is currently in a technical recession after experiencing two straight three-month contraction periods this year.
Until recently, the city had some of the strictest coronavirus rules in the world as it followed China’s zero-Covid policy.
“The Hang Seng has hit a 13-year low and nothing is really helping the fragile sentiment,” said Dickie Wong, executive director of Kingston Securities.
“There is also a feeling that tax refunds are not enough to attract foreigners back to Hong Kong,” he added.
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Traders are also concerned by the Hong Kong government’s “unprecedented silence on key economic indicators,” said Kelvin Tay, regional chief investment officer at UBS Global Wealth Management.
However, Mr Tay added that investors were primarily concerned about “the economic outlook”. [of China] and a spike in Covid cases in the middle of the party congress in Beijing.”
More than 2,000 delegates gathered in Beijing this week to elect leaders and debate key policies at the Communist Party convention.
President Xi Jinping is set to be confirmed as party leader for a historic third term on Sunday.
Other Asia-Pacific stock markets were also down on Thursday, with benchmark stock indices in Japan, South Korea and Australia falling more than 1%.
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