China stocks fell nearly 1 per cent on Friday morning ahead of a slew of economic data, with some investors locking in profit from a month-long rebound that reflects expectations for a strong first quarter.
Hong Kong shares also dropped, tracking weak global markets, as bank shares slumped in Europe and the United States.
The blue-chip CSI300 index fell 0.8 per cent, to 3,183.82 points by the lunch break, while the Shanghai Composite Index lost 0.9 per cent, to 2,981.42 points.
In Hong Kong, the Hang Seng index dropped 0.7 per cent, while the Hong Kong China Enterprises Index lost 0.9 per cent.
Forex reserves
China’s foreign exchange reserves surprisingly rose in March, the first monthly gain since November, as cooling expectations of US interest rate hikes eased pressure on the yuan.
But investors awaiting economic indicators for March, including money supply, new lending and inflation due over the next week, were little inspired.
“The yuan has already stabilised due to central bank intervention so the forex reserve data didn’t stir much excitement,” said David Dai, Shanghai-based investor director at Nanhai Fund Management Co.
“The market has already priced in expectations of a rebound in economic performance in the first quarter, so today's correction is very natural.”
Fed rate hikes
Meanwhile, investors continue to watch closely the attitude of the US Federal Reserve toward monetary policy, even as the market now expects fewer rate hikes this year than previously anticipated.
The US economy is on a solid course with some hints of inflation so the Fed is on track for further interest rate hikes, Fed Chair Janet Yellen had said on Thursday in a defence of her decision to tighten policy late last year.
All main sectors fell in China and Hong Kong.
Hong Kong-listed shares of Chinese telecom equipment maker ZTE Corp slumped for a second day after trading resumed since US trade restrictions. ZTE’s Shenzhen-traded shares also tumbled 4.1 per cent by midday.