The index shed nearly 600 points during trading. It ended the day 517 points or 1.8 percent lower at 28,310.
Turnover was HK$175.8 billion.
Analysts say market sentiment took a hit as investors feared volatility would return, with authorities having provided stability to financial markets leading up to the centenary celebrations of the Chinese Communist Party. Now that the event has passed, investors will have to live without that perceived layer of safety.
Xinyi Solar was the day’s biggest blue-chip loser, plunging more than 8 percent to finish at HK$15.40.
Tech shares also struggled. Tencent fell 1.6 percent and Alibaba gave up 3.6 percent.
Across the border, the Shanghai Composite Index sank nearly 2 percent, and the Shenzhen Component Index tumbled almost 2.5 percent.
Regional stocks were mixed. The Nikkei in Japan climbed 0.27 percent; the ASX200 in Australia rose 0.59 percent; but both South Korean and Taiwan stocks were down slightly. (Additional reporting by AFP)