China, HK stocks drop on Wall St tech woes, rising Sino-U.S. tensions

China and Hong Kong stocks dropped on Wednesday, following Wall Street's tech rout overnight, and as escalating Sino-U.S. relations and falling oil prices dampened risk appetite. ** Some mainland Chinese investors are seeking safe haven in bonds, as signs of tighter regulatory scrutiny and climbing yields threaten stretched valuation of technology shares. ** China's start-up board ChiNext , which is up 42% this year, slumped over 3% on Wednesday.

China and Hong Kong stocks dropped on Wednesday, following Wall Street's tech rout overnight, and as escalating Sino-U.S. relations and falling oil prices dampened risk appetite. ** Some mainland Chinese investors are seeking safe haven in bonds, as signs of tighter regulatory scrutiny and climbing yields threaten stretched valuation of technology shares.

** China's start-up board ChiNext , which is up 42% this year, slumped over 3% on Wednesday. ** China's blue-chip CSI300 index fell 1.5% to 4,622.56 points at the end of the morning session, while the Shanghai Composite Index slipped 1.1% to 3,280.96 points.

** In Hong Kong, the Hang Seng index dropped 1% to 24,385.51 points. The Hong Kong China Enterprises Index slid 1.1% to 9,725.97. ** Wall Street closed lower on Tuesday as heavyweight technology names extended their sell-off to a third straight session, sending the Nasdaq into correction territory. Adding to the gloom, oil prices hit lows not seen since June.

** Chinese semiconductor shares continued to slide as a possible U.S. sanction against Chinese chip-making giant SMIC cast a pall over the sector. ** Shanghai-listed shares of Semiconductor Manufacturing International Corp plunged 3.6%, while its Hong Kong-listed shares lost nearly 2%.

** Should the ban occur, more than half of SMIC's sales could be affected, potentially dealing a bigger blow to Chinese equipment and materials players, brokerage CLSA wrote in a note. ** Sentiment in China was also hurt by signs that regulators are stepping up crackdown on speculation. Three high-flying stocks listed on the ChiNext market suspended share trading on Wednesday, citing investigations into "abnormal volatility".

** It's time to swap stocks for bonds, said Li Bei, fund manager at hedge fund manager Banxia Investment. ** "Currently, A-share valuations are purely supported by risk appetite, which is totally unreliable. Reversal of sentiment can happen at any time," she wrote on Wednesday.