Hong Kong's Hang Seng Index slid 3.5 percent to 12,458.38.
Movements in Hong Kong's interest rates typically track US credit policy because the local currency is pegged to the dollar.
"As soon as the Fed starts to raise interest rates, the Asian economies will have to follow,'' said Yuktai Chan, who helps manage about US$3 billion in Asia, excluding Japan, at Threadneedle Asset Management in London. Rising rates will "choke off consumer demand and credit-card spending." National Australia Bank Ltd, the country's largest lender, slid 5.4 percent to A$29.71. The company yesterday said first-half profit before some items fell as much as 5 percent.
A report yesterday on Chinese gross domestic product in the first quarter also topped some economists' forecasts. China said that too much investment in some industries was causing "great pressure" for inflation.
China's broadest measure of money supply rose in March, which the government may take as a cue to introduce measures to curb growth, such as raising interest rates, according to Dong Tao, an economist at Credit Suisse First Boston.
Hong Kong's H-share index surged 152 percent last year amid optimism of economic and profit growth in China. It dropped 6.1 percent this year.
Jiangxi slid 13 percent to HK$4.10 this week. Aluminum Corp of China, the country's largest aluminum producer, fell 11 percent to HK$6.20. Commodities-related stocks slumped on concern slower growth will dent demand. China Telecom Corp, the nation's biggest fixed-line carrier, lost 9.7 percent to HK$2.55.
Japanese companies that do business in China such as Daikin Industries Ltd. declined. Daikin, which ships its air conditioners to China, lost 1.1 percent to ¥2,625. Komatsu Ltd, the world's second-largest maker of construction machinery, shed 1.8 percent to ¥654. Increased demand in China helped Komatsu report a fivefold surge in fiscal first-half profit.
"From the news out of China, too much of a good thing can be bad," said James Cheng, who helps manage the equivalent of US$300 million at Asia Strategic Asset Management Ltd. "The pressure's building up" for rate increases.
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