The 50 percent in extra US duties levied on imports from China on Wednesday have further accelerated deleveraging by investors.

That comes as part of a risk-off mode taken by investors following escalating trade tensions between the world's two largest economies, according to financial experts.

However, they warned that those investors who saw market downturns as an opportunity and went along with market momentum could find themselves on the short end of the stick as a result of volatilities.

Their remarks came as the benchmark Hang Seng Index slumped 1.6 percent to 19,815 at the noon trading break, just as the new tariffs by the United States took effect.

The decline marked the index's lowest level since January 23, while the Hang Seng Tech Index fell 1 percent and mainland shares also returned to the red.

"No matter which market you are talking about, they cannot avoid the three 'T's, which are Trump, trade and tariffs," said Feng Shuyan, an independent portfolio manager, who previously worked with Chubb investment management as associate general manager.

She said the latest market trend reflected the rather bearish sentiment among investors, which sped up ongoing deleveraging, and that such a downward trend might continue in the SAR given it is a free port.

"Hong Kong is an international financial centre and is more correlated to global stock market performance," she said.

"Going forward, it will probably experience lots of volatilities, you will ride roller coasters, as the volatility, the deleveraging, the liquidation process will continue to bite," she told RTHK, adding that institutional investors' reductions on risk assets will further weigh on the market.

"Cash is king, so maybe place a safe bet, " she advised investors.

Separately, James Wong, chief executive of Almagest Asset Management, said the latest market retreat came amid speculation over the so-called "Mar-a-Lago Accord", a phrase coined last year that refers to efforts to weaken the US dollar and thereby reduce the huge US trade deficit.

"Market participants tend to think that the US is going to have this tariff coalition, and the receiving end of that coalition is going to be China, so it's going to be a duel between two giants now," he told RTHK.

"Right now, I think none of the market participants are eager to get into the market and the short-term fluctuations are hardly indicators that can help us judge what is the general flow of capital and where the market is heading."

He suggests investors stay calm and not chase the momentum to avoid a "1929 incident", which saw a market crash on Wall Street that year and led to the largest recession in modern history.

"If you're chasing momentum, chances are you are going to be played out by the volatility," he said, noting that other assets such as bonds from Australia could instead be favoured by investors.

"What could happen next is going to be very, very messy, in our opinion, and the general direction is that the capital markets is going down for a prolonged period."