September 28, 2016 / 4:46 AM / a year ago

China stocks sag ahead of long holiday; HK follows Asian markets lower

* SSEC -0.3 pct, CSI300 -0.2 pct, HSI -0.6 pct

* China investors cautious ahead of long holiday

* China property shares firm despite fresh gov curbs

SHANGHAI, Sept 28 (Reuters) - China stocks sagged on Wednesday in thin trading, as investors’ risk appetite continued to wane ahead of the week-long National Day holiday that starts on Oct 1.

Hong Kong shares followed Asian markets lower, giving back some of Tuesday’s gain, that partly stemmed from assessments that Democrat Hillary Clinton won the first presidential debate. Many investors regard her rival, Republican candidate Donald Trump, as a potential source of uncertainty for the global economy given his stance on trade issues.

China’s blue-chip CSI300 index fell 0.2 percent, to 3,234.51 points by the lunch break, while the Shanghai Composite Index lost 0.3 percent, to 2,989.70 points.

Many investors are reluctant to stake positions ahead of the upcoming holiday, which will see China’s stock market closed all next week.

Reflecting lower risk apatite, trading turnover in Shanghai has shrunk, while outstanding margin financing hit its lowest in 1-1/2 months.

Recent economic data has shown signs of recovery in China’s economy. Industrial sector profits jumped 20 percent in August, the best showing in three years, while a Reuters poll showed manufacturing sector activity likely expanded modestly for a second straight month in September.

But many investors remain sceptical about the sustainability of a recovery that they believe has depended on government stimulus.

Most sectors lost ground but property shares were strong, as investors bet developers will benefit from the recent surge in home prices in major cities despite fresh curbs by local governments.

China’s eastern city Hangzhou will scrap a stimulus housing policy and raise the downpayment ratio for second-home purchases, state media reported on Tuesday, in the country’s latest move to deflate fast-rising home prices.

In Hong Kong, the Hang Seng index dropped 0.6 percent, to 23,421.91 points, while the Hong Kong China Enterprises Index lost 0.9 percent, to 9,657.44.

Reflecting cautious sentiment, shares in Postal Savings Bank of China (PSBC) made a flat debut in Hong Kong.

Analysts have expressed concerns that a suspension of the Shanghai-Hong Kong Stock Connect during the Sept 29-Oct 10 period due to the Chinese holiday would have a negative impact on market liquidity in Hong Kong, given mainland investors’ contribution to the strong rally recently.

Samuel Shen and John Ruwitch; Editing by Simon Cameron-Moore

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