Market sentiments also dampened after Hong Kong authorities reported a new record of more than 55,000 COVID-19 cases on Wednesday, as the omicron variant outbreak continues.
At closing bell, the benchmark Hang Seng Index declined 1.84%, or 417.79 points, to 22,343.92. The Hang Seng China Enterprises Index fell 1.8%, or 144.86 points, to 7,908.18.
Hong Kong is preparing to impose a large-scale lockdown for mandatory mass testing in the second half of March. The restrictive measure comes as the city's COVID-19 crisis showed no signs of abating, with coronavirus infections hitting new record-highs in recent days.
Compounding the downbeat mood was the rapid surge in prices of crude oil amid the Russia-Ukraine conflict, with international benchmark Brent crude futures up 6.17% to $111.45 per barrel. U.S. crude futures also saw big gains, rising 6.1% to $109.72 per barrel.
The Ukraine war fanned commodity prices, with crude oil futures topping US$100 a barrel the first time since 2014, They reached US$110.46 in Asian trading on Wednesday. Gold advanced 2.3% to a one-year high of US$1,943.80 an ounce.
In corporate news, Zai Lab shares dropped nearly 10% after the biopharmaceutical company said its full-year net loss swelled in 2021 despite a nearly threefold increase in revenue.
XPeng lost 5% after Chinese electric-vehicle makers reported lacklustre sales in February, likely due to the Lunar New Year holiday. BYD lost 0.5% and Geely Auto slid 1.9%.
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