Hong Kong stocks plunged 717.74 points, or 5.15 percent, to close at 13,221.35 on Thursday, on the overnight fall of the Wall Street.
Turnover rose to 51.79 billion HK dollars (6.69 billion U.S. dollars) from Wednesday's 42.24 billion HK dollars (5.45 billion U. S. dollars).
Hong Kong stocks opened at 13,068.93, 870.16 points lower than the previous close. The benchmark Hang Seng Index soon broke the psychological 13,000 level to 12,943.11. Investors hunting for Chinese mainland stocks helped narrow the losses of the index.
All the blue chips ended lower except CITIC Pacific following news of its parent's rescue package. Traders said investor sentiment is worsening and the benchmark index could fall as low as 12,500 very soon.
The slide followed the Dow Jones Industrial Average falling 411.30 points, or 4.73 percent, to 8,282.66 Wednesday, after Intel slashed its fourth-quarter revenue forecast and U.S. Treasury Secretary Henry Paulson retreated from the original intent of the U.S. bank-rescue plan to buy toxic mortgage assets. Paulson said he has turned his attention to non-bank financial institutions and consumer finance.
"The outlook for Wall Street remains uneasy, after the government changed its asset-rescue program, which may lead to more corporate bankruptcies in the near term," said Louis Tse, a director at Value Convergence CEF Securities.
Among heavyweights on the local market, HSBC fell 6.3 percent to 80.85 HK dollars, China Mobile dropped 4.6 percent to 65.65 HK dollars and PetroChina slumped 6.4 percent to 5.60 HK dollars.
Hong Kong Exchanges fell 7.9 percent to 66.60 HK dollars, after Goldman Sachs downgraded it to neutral from sell, and sharply cut its target price to 52.00 HK dollars from 126.00 HK dollars.
The company, which operates Hong Kong's stock and derivatives exchanges, said Wednesday its third-quarter net profit fell 43 percent to 959.65 million HK dollars as market turnover shrank.
Property stocks weakened as some banks further raised the interest rates for new mortgages. Cheung Kong was down 6.3 percent, Henderson Land down 6.35 percent, SHK PPT down 7.14 percent, and New World down 2.2 percent.
With New York oil futures sagging close to 55 U.S. dollars, all the major oil producers and refiners lost ground. CNOOC was down 5.27 percent while Sinopec Corp down 4.08 percent. (One U.S. dollar = 7.743 HK dollars)