HONG KONG: China stocks fell and Hong Kong stocks closed more than 2% lower on Thursday as investors turned wary of short-term volatility following a surge in tech stocks and the Hang Seng Index hitting a three-year high.
At the close, the Shanghai Composite index was down 0.51% at 3,408.95.
The blue-chip CSI300 index was down 0.88%, with its financial sector sub-index lower by 1.07%, the consumer staples sector losing 1.62%, the real estate index falling 0.43% and the healthcare sub-index declining 1.11%.
Hong Kong’s benchmark Hang Seng index declined 2.23%, its biggest daily drop in March, closing at 24,219.95.
Hong Kong-listed tech giants extended losses, retreating as much as 3.4%.
Hong Kong stocks had accumulated significant gains in the previous session, and as a result, some investors took profits, which is quite normal, said Kenny Ng, securities strategist at China Everbright Securities International.
The major resistance for the Hang Seng in the short term is 25,000 points, he added. Index heavyweight Tencent lost 3.8% after the internet giant, late on Wednesday, forecast a “low teens” rise in capital expenditure this year.
Search engine platform Baidu plunged 5.4% to lead the decline.
The price-to-earnings ratio of the MSCI China Index reached its previous peak of around 12 times and that valuation is unlikely to improve further if economic growth remains weak, BofA Securities analysts said in a note this week.
The smaller Shenzhen index ended down 0.6% and the start-up board ChiNext Composite index was weaker by 1.004%.
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