China, Hong Kong: Stocks drop as Paris terror stirs anxiety

[SHANGHAI] China and Hong Kong stocks dropped on Monday morning, tracking regional markets, as Friday's deadly attacks in Paris dampened risk appetite among global investors.

Sentiment on the mainland was also hurt by Chinese stock regulator's announcement over the weekend that it would raise margin finance requirements to reduce systemic risks.

China's blue-chip CSI300 index opened 1.7 per cent lower, but pared some losses to end the morning down 0.7 per cent, at 3,720.73 points. The Shanghai Composite Index lost 0.5 per cent, to 3,562.54 points.

The Hang Seng index dropped 1.6 per cent, to 22,031.16 points while the Hong Kong China Enterprises Index lost 1.9 per cent, to 9,985.54. "Terror in Paris heralds further global uncertainties,"wrote Hong Hao, managing director and chief China strategist at BOCOM International. "While CSRC tries to deleverage, global risk-off events can pressure existing leveraged portfolios," he said, referring to the decision by the China Securities Regulatory Commission (CSRC) to tighten margin requirements.

His view was echoed by Shanghai-based hedge fund manager Liao Bing, who cautioned against more risks stemming from mining and oil-producing regions.

Most sectors in China fell, but IT and telecommunications stocks rose. The tech-heavy start-up board ChiNext board also bucked the trend, rising nearly 1 per cent.

Transportation stocks were among the hardest hit on Monday, with airline operators including China Eastern and Air China slumping amid concerns that the Paris attacks would deter people from travelling overseas.

In Hong Kong, shares fell across the board.

REUTERS