China stocks fall, led by metal stocks; Hong Kong also down

A man walks past a panel displaying the closing blue chip Hang Seng Index and a banner on "Shanghai-Hong Kong Stock Connect" inside the Hong Kong Exchange in Hong Kong in this March 5, 2015 file photo. A tepid response from investors to the Hong Kong-Shanghai Stock Connect scheme in its first year has made industry executives sceptical about the success of proposed exchange link-ups and their value in providing equity market access. REUTERS File pic

SHANGHAI: China stocks were sluggish on Tuesday morning as metal producers fell on lower commodity prices, weighing on a market already under pressure from a fresh batch of initial public offerings.

Hong Kong shares were also weak, tracking falls in global markets amid renewed concerns over world economic growth.

China's blue-chip CSI300 index fell 0.9 percent, to 3,720.62 points at the end of the morning session, while the Shanghai Composite Index lost 0.7 percent, to 3,583.98 points.

Commodity-related stocks including Baoshan Iron and Steel Corp, Aluminum Corp of China and Yunan Copper Co fell, after metal prices hit multi-year lows as a strong dollar exacerbated oversupply fears.

The sector's bearish sentiment has spread to other sections of the market, which already faces pressure of a correction after bouncing more than 20 percent from an August low hit during the summer market rout.

"The dynamics in the market were rather similar to yesterday with investors concerned about the resumption of IPOs as well as the extremely low commodity prices that we are seeing," said Gerry Alfonso, director of Shenwan Hongyuan Securities Co.

All main sectors ended the morning in negative territory.

Banking stocks declined on renewed worries about lenders' asset quality.

Shares in Ping An Bank fell nearly 2 percent, heading towards its biggest one-day drop in two months. Citi wrote in a report that Ping An's management believes asset quality has a high correlation with China's macro environment and does not expect any non-performing loan turnaround in 2016.

In Hong Kong, the Hang Seng index dropped 0.7 percent, to 22,507.96 points, while the Hong Kong China Enterprises Index lost 1.3 percent, to 10,093.60.

The tech sector was the only sector in Hong Kong was in positive territory by the lunch break.

Shares of SCMP Group Ltd bucked the broader trend, rising nearly 2 percent, after Bloomberg reported that Jack Ma, founder and executive chairman of Alibaba Group Holding Ltd , is in talks to buy a stake in the publisher of Hong Kong's South China Morning Post. - Reuters