Hong Kong stocks tumbled on Wednesday as the city was rocked by a massive protest against government plans for a controversial extradition law.
The Hang Seng Index tumbled 1.7 percent, to 27,308.
"Uncertainty on local policies will confuse investors and affect the flows in and out of Hong Kong stocks," Ronald Wan, chief executive of Partners Capital International, told Bloomberg News.
"Investors now need to ponder whether or not to pull out of the market given the local events and global factors including the trade war."
The Hong Kong dollar meanwhile strengthened as the rate banks charge each other to borrow cash – known as the Hong Kong Interbank Borrowing Rate (Hibor) – rose to its highest since 2008 as lenders pulled cash out of the financial system. The rate has been rising for days.
Some observers suggested the increase in Hibor could be down to concerns about fund outflows from the city, though others suggested the money was being used to pay dividends or to meet seasonal demand, which often happens in June.
Alibaba's flagged initial public offering has also been tipped to suck up liquidity, experts said.
On the mainland, the Shanghai Composite Index shed 0.6 percent, to 2,909 while the Shenzhen Composite Index lost 0.6 percent, to 1,528.
In other markets, Tokyo shed 0.4 percent, Singapore was down 0.4 percent and Wellington ended 0.1 percent off. Mumbai and Jakarta were also well down, while Sydney was marginally off. (AFP)