SHANGHAI: Chinese stocks fell on Monday despite fresh government curbs on short selling, while oil shares led the Hong Kong market higher.

Investors took in their stride news that China Evergrande Group was ordered to liquidate by a Hong Kong court, judging this had been priced in.

In China, both the blue-chip CSI300 Index and the Shanghai Composite Index fell 0.9%, as a rebound since mid-last week triggered by fresh monetary easing loses steam.

Hong Kong’s Heng Seng Index rose 0.8%, with Chinese oil giants jumping amid higher crude prices.

On Sunday, China’s securities watchdog said it would suspend the lending of lock-up shares for short selling starting on Monday. The regulator will also slow the process of share lending in the securities refinancing market from March 18.

Yang Delong, chief economist at First Seafront Fund Management Co, said the measures would “weaken short sellers and strengthen support to the market”.

But Yuan Yuwei, hedge fund manager at Water Wisdom Asset Management, said that short selling actually helps curb price volatility, and the new measures “don’t change the fundamentals, which ultimately determine prices”.

Big-caps far outperformed small-caps on Monday, signalling sustained state support toward state-owned companies.

The CSI Bank Index gained 0.9% to its highest close in three months, but the CSI 1000 index of small-caps lost 2.6%.

In Hong Kong, shares of Chinese oil giants including Sinopec, CNOOC and PetroChina climbed as oil prices rose amid heightened geopolitical tensions in the Middle East.

An index tracking mainland property developers rose 0.9%, in line with the broader market, after a Hong Kong court ordered the liquidation of China Evergrande.

“The liquidation had been expected, and now it’s confirmed. It has already been priced in,” said Mark Dong, general manager of Minority Asset Management in Hong Kong.