Chinese banks led the Hong Kong decline after Liu Minkang, chairman of the China Banking Regulatory Commission, said Beijing plans to control the pace of credit growth this year. New yuan loans are expected to fall to 7.5 trillion yuan this year from 9.5 trillion yuan in 2009, he said at a forum in Hong Kong.
Citic Bank tumbled 4.1 percent to 5.61 Hong Kong dollars, Bank of China lost 3.4 percent to 3.95, China Construction Bank fell 3.1 percent to 6.22, and ICBC was down 2.6 percent at 5.89. Retailer Esprit fell 4.4 percent to 54.50, leading the day's blue chip decliners after worse-than-expected economic data from Germany, the clothes maker's single biggest market.
Investors also eyed China's scheduled report on fourth-quarter gross domestic product, December and 2009 inflation data, and other major economic indicators Thursday. Liu's comments also contributed to a sharp decline in the Shanghai Composite Index, where shares tumbled 2.93 percent. The Shanghai Composite Index, which covers both A and B shares, was down 95.02 points at 3,151.85 on turnover of 192.7 billion yuan (28.2 billion dollars).
Industrial and Commercial Bank of China, the nation's biggest lender, dropped 2.6 percent to 4.93 yuan. Expectations of slower loan growth also hit real estate developers, which relied on relatively high leverage ratios to achieve business growth. China Vanke declined 3.0 percent to 9.76 yuan.