HONG KONG -- A wave of panic selling pushed the Hang Seng below a key benchmark and to a four-month low Tuesday, and other Asian indices declined substantially, too, as investors mulled reports that China Development Bank won't take a $2 billion stake in Citigroup ( C). The Hang Seng dived 630 points, or 2.4%, to 25,837, while in China the Shanghai Composite Index lost 54 points, or 1%, to 5443. "Hong Kong has got to take more pain," says Andrew Clark, a trader for SG Securities in Hong Kong. "If the index goes to 20,000, then people will come back because it will have fallen a good 35% from it's highs. At 24,000, people will say, 'yeah, it cheap, but not outstandingly cheap.'" In late November, when the Hang Seng reached 25,861 points, there was a 20% rebound in the index, and when it reached the same level in December, there was a 10% rebound. The third time around, investors got no such reprieve. Clark adds that funds may be shunning the Asian exchanges right now, withholding cash to buy into a potentially deeply discounted Citigroup rights issue in the U.S. For the second day running, telecom stocks were the hardest hit. China Telecom ( CHA) plunged 8.3% to HK$6.17, while China Mobile ( CHL) tumbled 4.2% to HK$124.80, and China Unicom ( CHU) lost 3.1% to HK$17.48. Only China Netcom ( CN) gained, up 1.5% to HK$24.45, as investors speculated that the much smaller telco may get a contract with Apple ( AAPL) to supply the iPhone to China, after talks with market leader China Mobile fell through on Monday.