Hong Kong stocks saw their losses widen Monday morning after China's new home prices extended their downtrend in April. The Hang Seng Index dropped 0.7% following a sharpy rise at the end of last week, fueled by reports that the Shenzhen-Hong Kong Stock Connect may be launched sooner than expected. The mainland-China-tracking Hang Seng China Enteprises Index or "H-share index" fell 0.8%. Official data released at the market open showed that China's new home prices fell in 48 of 70 top cities during April, with average prices dropping for the eighth straight month on a year-over-year basis, according to calculations by The Wall Street Journal. Several leading real-estate firms saw their shares lose substantial ground, as Evergrande Real Estate Group Ltd. slid 3%, China Vanke Co. lost 1.8%, Hang Seng constituent China Resources Land Ltd. sagged 1.4%, fellow index component China Overseas Land & Investment Ltd. shed 1.2%, and Country Garden Holdings Co. moving down 0.8%. Major state-owned Chinese banks suffered broad-based declines as well after a Sunday report by the Economic Observer said the Chinese central bank planned to allow several banks to issue large-denomination certificates of deposite (CDs) on a trial basis in order to make the state-dominated banking sector more competitive. With the grip relaxed on the issuance of CDs, the central bank may be only one step away from the complete liberalization of interest rates, the report said. Among major lenders, China Minsheng Banking Corp. fell 2.5%, Bank of Communications Co. and China Citic Bank Corp. lost 1.1% each, and both Agricultural Bank of China Ltd. and China Merchants Bank Co. were lower by 0.7%. On the upside, the tech sector advanced broadly -- software developer Kingdee International Software Group led the gains with a 13.5% surge after announcing a plan to allot up to 290 million new shares at a discount of about 10% to its previous closing price. It peers were also higher, including Kingsoft Corp. (up 5.6%), Forgame Holdings Ltd. (up 4.4%), NetDragon Websoft Inc. (up 3.3%), and Baioo Family Interactive (up 1.7%). Reports of the opening of direct stock trade between Hong Kong and Shenzhen also helped the sector, as the Shenzhen bourse is dominated by tech stocks. Meanwhile, shares of CGN rose 2.1% on news out Friday that it would be added to the Hong Kong H-share index in early June, though Dalian Wanda Group Co. -- also to join the index -- traded 0.8% lower. Shandong Weigao Group Medical Polymer Co. and Weichai Power Co. , both of which are leaving the index, were down 1.9% and 0.9%, respectively. On the mainland itself, the Shanghai Composite Index retreated 0.4% after rallying 2.4% on Friday.
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