Reuters received multiple messages via email and social media from foreign banking and legal professionals expressing shock at the decision.
A spokesman for the U.S. Consulate General described the rejection as "deeply troubling."
"This decision is especially disturbing because it mirrors problems faced by international journalists in the mainland and appears inconsistent with the principles enshrined in the Basic Law," he said.
Reporters Without Borders called on Hong Kong authorities to reverse their decision.
"This is clearly a form of retaliation for his involvement in the public talk organised in August by FCCHK, which angered Beijing by featuring a pro-Hong Kong independence activist," the group said in a statement.
"Such action is yet another proof that the Chinese authorities are extending their policy of intimidating foreign journalists to the territory of Hong Kong," it said.
The Hong Kong Journalists Association (HKJA) said it was shocked at the move and urged the government to reconsider and explain its decision.
"If left unexplained, it will give rise to worries that it is an act of reprisal against Mr Mallet, further undermining public confidence in freedom of speech and the press," the HKJA said.
Twenty-two lawmakers from Hong Kong's democratic opposition called for Mallet's visa to be reissued.
"It is sending a very wrong message to the international community that Hong Kong is just another city in mainland China," veteran Democrat Party legislator James To told reporters.
Some pro-establishment politicians backed the government's move, however, saying strong messages had to be sent that Hong Kong had zero tolerance of independence calls, government-funded broadcaster RTHK reported.
New York-based Human Rights Watch said in a statement the visa rejection, together with the unprecedented banning of the Hong Kong National Party, showed a quickening downward spiral for human rights in Hong Kong.
"This is shocking and unprecedented," it said. "The Hong Kong authorities' visa renewal rejection — without explanation — of a journalist who's done nothing more than his job smacks of Beijing-style persecution of critics."
The FCC, whose members include senior lawyers, scholars and government officials besides journalists, has long portrayed itself as fostering and defending free speech.
Mallet has worked as a journalist and foreign correspondent for more than 30 years, first at Reuters and then for the Financial Times, including more than 12 years in Asia.
—CNBC's Paula Sailes and Vivian Kam, and Reuters contributed to this report.