Hong Kong, China shares slide

China shares slipped on Thursday, dragging Hong Kong shares into the red as spooked investors sold off property-related stocks after Beijing announced details of a proposed extension of home purchasing curbs to second and third-tier cities. Official data on Thursday showed China's annual housing inflation quickened in July for a second straight month, keeping pressure on Beijing to rein in the property sector.
Many economists have warned that a bursting of a property bubble is the biggest risk facing the world's second-largest economy in the medium to long term, with local media reports suggesting that tighter controls could yet be seen. While Chinese banks are trading at valuations near their lows during the 2008 financial crisis, Hong said he doubts they have fully priced in the impact of a possible tumble in mainland housing prices.
The Shanghai Composite Index closed down 1.6 percent at 2,559.5 points with its total A-share turnover about 7 percent less than its 20-day average. The Shanghai property sub-index was the standout underperformer, declining 2.4 percent. Poly Real Estate and smaller rival, Yunnan Metropolitan Real Estate Development Co Ltd both lost more than 4 percent, while Anhui Conch Cement slipped 6.2 percent in volumes more than twice its 30-day average.
In Hong Kong, Chinese Overseas Land & Investment Ltd and China Resources Land Ltd shed 3.8 percent and 2.5 percent, respectively. Evergrande Real Estate Group Ltd lost 4.1 percent, while Anhui Conch Cement Co Ltd dropped 7.1 percent. The underperformance of Chinese property-related names helped to drag the China Enterprise Index of top Hong Kong-listed Chinese companies down 2 percent, while the Hang Seng Index, declined 1.3 percent to 20,016.3 points.
Capping losses was Hong Kong Exchanges and Clearing Ltd (HKEx), which surged by as much as 7 percent in early trade after announcing joint venture talks with two mainland bourses. It eventually ended the day up 3.6 percent in volume that was three times higher than its 30-day average, setting it apart from a market that remained otherwise fragile, with overall turnover staying below average. HKEx's price movements on Thursday illustrated the trend in the past week where investors chose to take intra-day profits, reluctant to hold onto stocks overnight, driving the benchmarks lower in the afternoon session.