Shanghai, Hong Kong stocks fall on overnight Wall Street losses, China power crunch

SHANGHAI: Shanghai and Hong Kong shares dropped on Wednesday, tracking overnight Wall Street losses and hit by China's worsening power crunch, as investors exited Chinese stocks vulnerable to factory shutdowns including chemicals and steelmaking.

The CSI300 index fell 1.1% to 4,828.41 at the end of the morning session, while the Shanghai Composite Index lost 1.8% to 3,537.60.

The Hang Seng index dropped 0.5% to 24,389.78. The Hong Kong China Enterprises Index lost 0.8% to 8,654.36.

** Analysts said China's power supply crunch, which has shut factories across the country, may pose a much bigger threat to the economy than the debt crisis at Evergrande Group.

Hong Kong shares tumble at start of trade

** Investors shunned industries vulnerable to power shortages, with non-ferrous metal, steel , chemicals plunging between 3% and 5%.

** China sought to reassure residents and businesses, urged railway companies to strengthen coal transportation and asked local governments to closely monitor the supply, demand and inventories of coal at power plants.

** The energy sub-index and the coal sub-index tumbled more than 4.9% each.

** China's central bank governor Yi Gang said China will stay with normal monetary policy settings for as long as possible.

** The Hang Seng Tech Index dropped 2.2%, tracking sharp declines on Wall Street on rising Treasury yields and deepening concerns over persistent inflation.

** The energy sector lost 3.3% as oil prices fell on demand concerns, while coal-related stocks plunged amid China's power crunch.

** The materials sector declined nearly 4%.

** Bucking the trend, property and financials gained, after cash-strapped Evergrande Group said it planned to sell a $1.5 billion stake it owns in Shengjing Bank Co Ltd to a state-owned asset management company. The developer jumped over 10%.

** Beijing is prodding government-owned firms and state-backed property developers such as China Vanke Co Ltd to purchase some of Evergrande's assets, people with knowledge of the matter said.