Hong Kong stocks retreated Wednesday as outflows from the city to mainland exchanges weighed on investor sentiment.
The Hang Seng Index fell by around 405.11 points, or 1.6%, to end at 25,633.21, while the Hang Seng China Enterprises Index decreased by 166.38 points, or 1.9%, to close at 8,596.59.
Goldman Sachs Group on Wednesday downgraded its rating on H shares to market-weight, citing the Hong Kong market's four-month underperformance against onshore peers, Bloomberg News reported.
The downgrade came amid a broad sell-off from mainland investors who appeared to be investing in semiconductors and other AI-linked shares in China.
Mainland-listed ETFs that invest in Hong Kong equities pulled 25 billion yuan from the city's market last week, the largest weekly outflow on record and a reversal from last year's steady inflows, according to Bloomberg data.
Meanwhile, the U.S. proposed additional taxes on imports from 60 economies, including China and Hong Kong, over forced-labor trade practices, the Office of the U.S. Trade Representative said.
The USTR has proposed a 10% additional tariff for economies that have partially enforced bans on the importation of certain forced labor goods, and a 12.5% tariff for all others, according to the release from the office.
In corporate news, Chinese carbon capture firm Beijing Shougang LanzaTech Technology (HKG:2553) soared in its Hong Kong debut. The firm's shares closed at HK$21.06, 44% above the offer price of HK$14.60.