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China, Hong Kong shares fall; resource sector hit by economic gloom
May 24, 2016 / 4:50 AM / a year ago

China, Hong Kong shares fall; resource sector hit by economic gloom

* CSI300 -0.7 pct; SSEC -0.8 pct; HSI: -0.4 pct

* China’s outstanding margin loans fall to 18-month low

* Resource shares drop on lower commodity prices

SHANGHAI, May 24 (Reuters) - Chinese and Hong Kong shares fell in line with regional markets on Tuesday, with resource companies slumping as commodity prices tumble amid worries over China’s economic health.

Investors are also increasingly worried about the likelihood of a U.S. interest rate increase in coming weeks.

China’s blue-chip CSI300 index fell 0.7 percent, to 3,064.72 points by the lunch break, while the Shanghai Composite Index lost 0.8 percent, to 2,821.79 points.

In Hong Kong, the Hang Seng Index dropped 0.4 percent, while the Hong Kong China Enterprises Index lost 0.7 percent.

Trading volumes in both markets were thin, reflecting weak risk appetite.

In China, outstanding margin loans - money investors borrow to buy stocks - shrank to the lowest level in 18 months, while many newly-launched mutual funds have been forced to slash their fundraising targets due to weak demand.

Yang Hai, analyst at Kaiyuan Securities, said trading will likely remain dull for a while as economic sluggishness discourages investor participation.

“The current economic environment doesn’t justify a sustainable rebound. In addition, regulators are reducing leverage in the asset management industry so money is not flowing in.”

Commodity shares dropped sharply in both China and Hong Kong markets, as Asian industrial commodities, including steel, iron ore and rubber, slumped on worries over the economic health of China and Japan.

Reporting by Samuel Shen and Pete Sweeney; Editing by Jacqueline Wong

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