Hong Kong's securities watchdog said on Tuesday it was investigating a last-minute sell order that pushed shares in banking giant HSBC to their lowest level in almost 14 years.

One single transaction in the city's traditional 10-minute closing auction period yesterday almost doubled the day's losses for shares of HSBC, which ended down 24.1 per cent (See:New rights issue batters HSBC stock).

The Securities and Futures Commission (SFC) said it was looking into the transaction, which reportedly saw 4.7 million shares dumped in the final seconds before the close.

It is believed the shares were dumped by short-sellers hoping to buy them back after the bank completes a 17.8 billion US dollar rights issue.

"The SFC is aware of what has happened in the closing auction session in relation to the movement of HSBC's share price and we are making inquiries," a spokesman for the regulator told news agency AFP.

HSBC closed at 33 Hong Kong dollars on Monday, its lowest level since May 1995. Shares had clawed back 12.9 percent in early trade Tuesday to 37.25.

Hong Kong's financial secretary John Tsang said he had met the SFC on Monday evening.

"Lots of Hong Kong people hold HSBC shares and they are very concerned about the ups and downs of its price. We are also very concerned and will closely monitor the development," Tsang said.

Dow Jones Newswires quoted sources saying that the bank had no plans to halt its rights issue.

Last week, the bank announced worse-than-expected annual results and said its rights issue was needed for future investments and not to shore up its balance sheet.

The bank reported a 70 per cent fall in annual net profit, mainly due to the dire performance of its US unit, where it has written off a huge chunk of its debt.