Hong Kong - Hong Kong shares fell 2.02 percent Monday, with China's clampdown on margin trading overshadowing its latest economic stimulus measure -- a big cut in the percentage of cash which banks must hold in reserve.
The benchmark Hang Seng Index tumbled 558.19 points to 27,094.93 on turnover of HK$211.01 billion ($27.23 billion), while Shanghai shed 1.64 percent.
The People's Bank of China cut by one percentage point the reserve requirement ratio (RRR), the second cut this year and the latest attempt to kick-start the world's number two economy.
Sunday's move came days after data showed Chinese growth at its slowest quarterly pace in six years. It follows two interest rate cuts since November.
Hong Kong stocks have surged this month as hopes of more easing measures have led investors to search for cheaper assets after a year-long rally in Shanghai saw that bourse double.
A decision last month to allow more fund managers to use a link-up between the two exchanges has sent the southern city's index fizzing.
However, the RRR news was overshadowed by Friday's announcement from China's stock market regulator that it would tighten rules on trading with borrowed money and increase the supply of shares for short-selling.
The news hit Chinese shares listed in Hong Kong.
"In terms of Chinese equities, we do have a positive outlook but it is going to be a very volatile market," said Tai Hui, chief market strategist for Asia at JPMorgan Asset Management in Hong Kong.
"It's going to demand a great deal of discipline among investors."
Petro China sank 6.12 percent to HK$9.97, ICBC bank lost 1.33 percent to HK$6.70 and Lenovo shed 4.39 percent to HK$12.64.
Among other firms HSBC fell 0.14 percent to HK$70.45, casino operator Sands China lost 2.65 percent to HK$33.10 and exporter Li & Fung dropped 1.87 percent to HK$7.88.
In mainland China the benchmark Shanghai Composite Index fell 1.64 percent, or 70.22 points, to 4,217.08.
Turnover passed one trillion Yuan ($163.3 billion) for the first time, although the exchange said the exact total was not available because it exceeded the maximum turnover its current system was able to display.
The Shenzhen Composite Index, which tracks stocks on China's second exchange, lost 1.99 percent, or 42.56 points, to 2,093.71 on turnover of 627.5 billion Yuan.
"Investors are taking profits in China," said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank. "The clampdown initiated by securities regulators is adding to the sell-off."
Securities firms led the decline in Shanghai. Citic Securities fell 4.30 percent to 33.63 Yuan while China Merchant Securities fell 6.77 percent to 34.31 Yuan.
Banks were also lower. Bank giant ICBC lost 3.90 percent to 5.42 Yuan in Shanghai while Ping An Bank eased 3.72 percent to 16.30 Yuan in Shenzhen.
AFP
