* CSI300 -1 pct; SSEC -1 pct; HSI +0.4 pct
* surge in new stock trading accounts sign fresh money inflows
* brokerages firm on record market trading volume
By Samuel Shen and Pete Sweeney
SHANGHAI, March 25 (Reuters) - Banking heavyweights dragged China’s stock markets lower on Wednesday, threatening to snap their 10-day winning streaking win, and analysts warned of rising volatility as more people piled into the market betting on a further rally.
“The market is a bit crazy now. Even migrant workers are beginning to open stock accounts,” Shen Zhengyang, Shanghai-based analyst at Northeast Securities said, referring to farmers who come to cities to work, often for low pay.
“Volatility would naturally increase,” he said.
China’s benchmark indexes have climbed some 55 percent since the central bank unexpectedly cut interest rates in November to support the slowing economy, and investors are betting that further policy easing this year will send more cash into the market.
Still, shares are looking a bit overbought on a technical basis after their latest run, leaving them vulnerable to profit taking.
The CSI300 index fell 1.0 percent, to 3,934.32 points at the end of the morning session, while the Shanghai Composite Index lost 1.1 percent, to 3,652.57 points.
The banking index fell 2.1 percent, weighed down by results from the Agricultural Bank of China Ltd (AgBank) , which after the close on Tuesday reported a 4 percent dip in fourth-quarter profit and a spike in bad loans as manufacturers and retailers struggled to repay debt.
But ChiNext, the Nasdaq-style board for high-growth start-ups, continues to power ahead to record highs despite lofty valuations. It was up 1 percent.
Hong Kong shares ended the morning mixed. The Hang Seng index added 0.4 percent, to 24,490.77 points, while the Hong Kong China Enterprises Index lost 0.5 percent, to 11,945.93.
Data released on Wednesday pointed to continued money flows into China’s stock market, which is the best-performing among Asia’s main indexes this year.
Over 1.1 million new stock accounts were opened last week in China, up 58 percent from the previous week, and the most weekly increase since October 2007, the height of China’s historic bull run.
Combined trading volume in Shanghai and Shenzhen hit an all-time high of more than 1.4 trillion yuan on Tuesday, while the volume of margin financing, or the money investors borrow for stock purchases, has been hitting successive record highs.
Brokerage shares generally outperformed the market on Wednesday on bets that they would continue to benefit from market bullishness.
Orient Securities Co Ltd, which surged the maximum 44 percent on its Monday market debut in Shanghai, was up 10 percent limit for the second consecutive day on Wednesday.
Stronger share prices are encouraging more initial public offerings by brokerages. GF Securities is conducting a Hong Kong IPO to raise up to $3.6 billion for business expansion.
Fuyao Glass Industry Group jumped 4.5 percent in Shanghai, after raising HK$7.39bn ($953 million) from its Hong Kong IPO, which was priced at the top of an indicative range.
Editing by Kim Coghill