Hong Kong stocks lost ground early Monday, erasing their opening gains in choppy trading, and Shanghai shares struggled to stay above water, as investors reacted to a slate of measures by China's central government to support the economy while clamping down on speculative stock-market activities. The Hang Seng Index dropped 0.3%, with the mainland-China-tracking Hang Seng China Enterprises Index edging 0.2% lower. Meanwhile, the Shanghai Composite Index swung between gains and losses, sitting flat about 40 minutes into the session. The weakness came after China's top securities regulator unveiled on Friday a raft of measures to curb margin trading, while also allowing fund managers to lend stocks for short-selling and expanding the list of shares which can be sold short. However, the regulator stressed a day later that there was no desire to "suppress" the hot stock market, but rather to improve its stability and healthy development. The People's Bank of China also made further moves Sunday to relax its monetary policy amid the economic slowdown, staging its biggest cut to banks' reserve requirement ratio in more than six years and releasing about $200 billion in liquidity for banks to lend. In Hong Kong, brokerage shares lost ground in the wake of the tighter margin rules, as Shenyin Wanguo HK Ltd. slid 4.1%, China Galaxy Securities Co. declined 3.3%, Citic Securities Co. lost 3.1%, and Haitong Securities Co. gave up 3%. On the other hand, major Chinese banks posted substiantial gains: Agricultural Bank of China Ltd. climbed 2.1%, China Construction Bank Corp. advanced 2%, Bank of Communications Co. added 1.4%, and Bank of China Ltd. moved up 1.1%. Several leading real-estate develpers also traded higher, as Evergrande Real Estate Group Ltd. tacked on 1.5%, China Vanke Co. improved by 1.3%, and Hang Seng component China Resources Land Ltd. climbed 1.2%.
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