05:38 AM EDT, 09/23/2022 (MT Newswires) -- Hong Kong stocks fell for a third straight session on Friday, with the key index hitting its lowest in almost 11 years, as recession fears intensified after central banks around the world took cues from the Federal Reserve's latest monetary policy tightening.
The Hang Seng Index retreated 1.2%, or 214.68 points, to end the week at 17,933.27, a closing level not seen since November 2011. The Hang Seng China Enterprises Index declined 1.3%, or 81.50 points, to 6,114.40.
Hong Kong's de-facto central bank raised its base lending rate by 75 basis points, mirroring the Fed's move, and warned of possibly more pain ahead.
As Hong Kong's currency is pegged to a narrow trading band between HK$7.75 and HK$7.85 per US dollar, the linked exchange system means the city lifts or cuts borrowing costs in lockstep with rate changes by the Fed.
The Fed has been aggressive in using interest rate hikes to bring down US inflation, which is currently at a four-decade high, and policymakers have signaled further hawkish moves.
Central banks from Asia to Europe followed suit to varying degrees and diverse economic tools to tame soaring prices that are not isolated to the US.
"Tightening financial conditions will lead to a further slowdown in global economic growth, putting expansions in vulnerable regions at risk and deepening anticipated recessions," Sara Johnson, executive director of economic research at S&P Global Market Intelligence, said in a Friday note.
In corporate news, BOC Hong Kong (HKG:2388) and Hang Seng Bank (HKG:0011) gained 4% and 2.5%, respectively, after raising their prime rates for the first time in four years in line with the surging borrowing costs.