HK, China stocks weaker as global central bank tightening worries weigh

* SSEC -0.2 pct, CSI300 -0.5 pct, HSI -0.4 pct

* Chinese money inflows into HK via Connect slump in June

* Beijing’s tightening could hurt economic activity – UBS

SHANGHAI, July 7 (Reuters) – Hong Kong and China stocks
followed most Asian markets lower on Friday morning as growing
concerns about policy tightening by the world’s central bank
weighed on global bourses.

Worries that China’s economic growth could slow in the
second half has also curbed risk appetite.

The Hang Seng, the Hong Kong benchmark that ranked among the
best-performing major indexes in the first half, dropped 0.4
percent, to 25,373.80 points by the lunch break, extending its
weekly decline to 1.5 percent. The Hong Kong China Enterprises
Index lost 0.6 percent, to 10,281.13.

Yang Hai, an analyst at Kaiyuan Securities said tightening
by the Federal Reserve and the European Central Bank “would have
a negative impact on liquidity situations in Hong Kong.”

However, he expects the impact on the China market would be
limited.

The market’s upward momentum also appears to be losing
steam, amid signs that the pace of Chinese money inflows – a
major source of strength – is slowing.

Net inflows from the mainland via “Connect” schemes slumped
by more than half in June, while monthly selling of Hong Kong
stocks through the cross-border links rose to a record this
year, according to the China Securities Journal, showing Chinese
investors are increasingly cautious.

Risk apatite appears waning on the mainland as well.

China’s blue-chip CSI300 index fell 0.5 percent,
to 3,642.39 points on Friday morning, on track to post a weekly
decline of 0.7 percent. The Shanghai Composite Index
lost 0.2 percent, to 3,205.25 points.

The mood has generally been cautious ahead of a raft of
Chinese data in coming weeks, which is expected to show steady
growth, but government measures to rein in the housing market
and debt risks are likely to drag on activity over the next few
quarters.

“Slower credit growth and higher funding costs due to
supervisory tightening are expected to have an effect on
fixed-asset investment and activities later in the year,”
economists at UBS said in a research note.

Most sectors fell in Hong Kong and China on Friday.

Hong Kong-listed IT shares fell sharply after the
tech-heavy Nasdaq fell 1 percent overnight, and as bellwether
Tencent Holdings weakened 0.7 percent.

Bucking the trend, Hong Kong shares in COSCO Shipping
Holdings, the world’s fourth-largest container
shipping line, surged to a 23-month high on robust profit
forecast.

(Reporting by Samuel Shen and John Ruwitch; Editing by Sam
Holmes)