China, HK shares drop on selloff in precious metals, tech

China and Hong Kong stocks tumbled on Thursday as the selloff inprecious metals and technology stocks rippled through related sectors.

At the midday break, the Shanghai Composite index .SSEC slipped 1% to 4,059.91 points, and the blue-chip CSI300 index .CSI300 was also down 1%.

The renewed selloff in gold and silver triggered heavy losses across precious metals stocks. The CSI SSH Gold Equity Index .CSI931238 tumbled 5.4% and the CSI SWS Non-ferrous Metal Index .CSISNMIM was down 5.6%.

UBS SDIC Silver Futures Fund 161226.SZ, the only silver futures fund in mainland China, is on track to hit the 10% daily limit down for the fourth consecutive day.

Tech shares also faltered following a global selloff. The CSI AI Index .CSI930713 was down 1.6% and the semiconductor index .CSI931865 declined 1.7%.

Liquidity is tightening seasonally before the Spring Festival, and investors may choose to reduce positions before the holiday to avoid overseas risks, putting downward pressure on indices," analysts at Nanhua Futures wrote in a note.

Still, there's a high probability of renewed strength after the holiday, especially strong policy support expectations provide solid underpinning, limiting downside space, they added.

Solar-related shares also tumbled after multiple companies denied cooperation with Elon Musk. The photovoltaic industry index .CSI931151 slid 5.5%, and shares of Jinko Solar 688223.SS were down 5.6%.

In Hong Kong, the benchmark Hang Seng .HSI was down 1.3%. Hong Kong's Hang Seng Materials Index .HSCIM fell more than 6%.

Baidu's Hong Kong-listed shares 9888.HK climbed the most in two weeks on share buyback and dividend optimism.

Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was weaker by 1.8% while Japan's Nikkei index .N225 was down 1%.

-Jiaxing Li/Reuters