HK stocks fall on Tencent regulatory concerns; China little changed

SHANGHAI: Hong Kong stocks fell on Tuesday, with tech shares leading the declines, as index heavyweight Tencent Holdings Ltd slumped over 10% after a media report stoked concerns over tighter regulation on online gaming.

** China stocks were unchanged, as a jump in healthcare stocks amid fresh COVID-19 fears offset falls in banks and developers.

** The Hang Seng index dropped 1.0% to 25,987.16 at the end of the morning session, while the Hong Kong China Enterprises Index lost 1.1%, to 9,233.11.

** The CSI300 index rose 0.2%, to 4,945.12, while the Shanghai Composite Index was unchanged at 3,464.31.

Hong Kong stocks open sharply lower

** The Hang Seng Tech Index fell 2.4%.

** Tencent was set to see its sharpest fall in a decade after a Chinese state media outlet branded online video games "spiritual opium", worrying investors that the sector may be next in regulators' crosshairs.

** Hong Kong-listed shares of rival NetEase Inc slumped as much as 15.7%, while those of game developer XD Inc and mobile gaming company GMGE Technology Group Ltd also plunged.

** In China, healthcare stocks surged as COVID-19 vaccine and diagnosis stocks jumped amid signs of the virus spreading into more Chinese cities. ** But property stocks in both markets weakened further.

** China Evergrande Group, the country's most-indebted developer, slumped nearly 5%, after Moody's downgraded the company and its affiliates, and a unit of Leo Group sued Evergrande for failing to pay fees for advertisement.

** "With the lack of signs of a rebound in economic fundamentals, a slowdown in domestic credit, and no further monetary easing policy, the stock market's risk appetite is unlikely to increase in the short run," UBS Securities China Rates Market analyst Mary Xia wrote.