Tencent Holdings slid 2.6 per cent to HK$298.20, Alibaba Group lost 3.4 per cent to HK$82.70 and e-commerce platform JD.com retreated 3.7 per cent to HK$110.80. Local property company New World Development sank 7.3 per cent to HK$14.12 while Henderson Land dropped 5.6 per cent to HK$19.50.

Rising borrowing costs continued to weigh on sentiment. The yield on the 10-year US Treasury, a benchmark for corporate bonds, rose as much as 0.41 percentage points to 4.69 per cent during Asian trading hours to hit the highest level since 2007.

03:18

China Evergrande suspends market trading amid questions about chairman’s whereabouts

China Evergrande suspends market trading amid questions about chairman’s whereabouts

“Currently the market has not fully priced in the possibility of the liquidation of Evergrande,” said Willer Chen, senior analyst at Forsyth Barr Asia in Hong Kong. “People are waiting to see how it goes.”

The Hang Seng Index has tumbled 5.9 per cent over the past three months, after losing 7.3 per cent in the second quarter. Overseas investors have sold a record US$17.5 billion worth of A shares – yuan-denominated shares of Chinese companies traded in domestic markets – in the past two months, trimming the net inflow this year to US$16.2 billion.

The exposure to China of global funds is now at a decade-low, according to Goldman Sachs.

Other key Asian markets were mixed. Australia’s S&P/ASX 200 lost 1.3 per cent and the Nikkei 225 Index in Japan dropped 1.5 per cent. South Korea’s Kospi edged up 0.1 per cent.