March 14, 2018 / 4:31 AM / 10 days ago

China, Hong Kong stocks drop; U.S. protectionism fears weigh

* SSEC -0.6 pct, CSI300 -0.5 pct, HSI -1.3 pct

* HK->Shanghai Connect daily quota used 1 pct

* Shanghai->HK daily quota used 2.8 pct

* BNY Mellon ADR China Select Index -1.1 pct

SHANGHAI, March 14(Reuters) - China and Hong Kong stocks fell on Wednesday morning as U.S. protectionism fears overshadowed strong China factory and investment data. ** At 04:05 GMT, the Shanghai Composite index was down 0.59 percent at 3,290.72, while China’s blue-chip CSI300 index was down 0.52 percent at 4,070.01. ** Chinese H-shares listed in Hong Kong fell 1.41 percent at 12,567.6, while the Hang Seng Index was down 1.25 percent at 31,206.31.

** China’s industrial output grew more strongly than expected at the start of the year, suggesting the economy has sustained solid momentum even as U.S. President Donald Trump readies hefty tariffs against one its most strategic growth drivers — technology. ** Trump is seeking to impose tariffs on up to $60 billion of Chinese imports in the very near future and will target the technology and telecommunications sectors, Reuters reported on Tuesday. ** Tariffs on tech exports could potentially hit the fastest growing segment of China’s industrial sector, an area that the country’s leaders have been keen to promote as they push for “higher quality” economic growth. ** “While risks of escalation in US-China trade tensions exist, we expect China to remain relatively restrained in its response and, as a result, overall economic damage to stay contained,” Louis Kuijs, head of Asia economics at Oxford Economics, said in a note. ** Tech and telecommunications shares slid in China and Hong Kong, with an index tracking major telecoms firms on the mainland down 0.7 percent. ** Also adding to U.S. protectionism worries, Trump on Tuesday fired Secretary of State Rex Tillerson, regarded as a moderate in his administration, replacing his chief diplomat with hawkish CIA Director Mike Pompeo. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.76 percent while Japan’s Nikkei index was down 1.04 percent . ** The yuan was quoted at 6.3162 per U.S. dollar, 0.12 percent firmer than the previous close of 6.324. ** The largest percentage gainers in the main Shanghai Composite index were Liuzhou Liangmianzhen Co Ltd up 10.09 percent, followed by Beijing Dynamic Power Co Ltd gaining 10 percent and Shenghe Resources Holding Co Ltd up by 5.33 percent. ** The largest percentage losers in the Shanghai index were Shanghai Fukong Interactive Entertainment Co Ltd down 9.98 percent, followed by Changshu Fengfan Power Equipment Co Ltd losing 9.97 percent and Beijing Airport High-Tech Park Co Ltd down by 5.82 percent. ** The top gainers among H-shares were Anhui Conch Cement Co Ltd up 1.68 percent, followed by China Gas Holdings Ltd gaining 1.06 percent and Agricultural Bank of China Ltd up by percent. ** The three biggest H-shares percentage decliners were Zhuzhou CRRC Times Electric Co Ltd which has fallen 2.74 percent, Air China Ltd which has lost 2.6 percent and ZhongAn Online P & C Insurance Co Ltd down by 2.4 percent. ** About 8.55 billion shares have traded so far on the Shanghai exchange, roughly 44.6 percent of the market’s 30-day moving average of 19.19 billion shares a day. The volume traded was 17.71 billion as of the last full trading day. ** As of 04:06 GMT, China’s A-shares were trading at a premium of 25.33 percent over the Hong Kong-listed H-shares. ** The Shanghai stock index is below its 50-day moving average and below its 200-day moving average. ** The price-to-earnings ratio of the Shanghai index was 15.02 as of the last full trading day while the dividend yield was 1.9 percent.

Reporting by Samuel Shen, Luoyan Liu and John Ruwitch; Editing by Sunil Nair

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