China shares dragged lower by Tencent

Hong Kong - Hong Kong shares fell on Thursday, dragged down by index tech heavyweight Tencent Holdings after US-listed peers declined, while CITIC Pacific Ltd. jumped after its parent company injected assets into the firm.

On mainland markets, shares edged downward as enthusiasm over last Friday's preferred shares announcement by China's securities regulator continued to wear off.

"We've seen some short-term profit-taking activity as investor expectations cooled yesterday and today, though fundamental attitudes to the market have not changed," said Tian Weidong, head of research at Kaiyuan Securities.

By midday, the Hang Seng Index was down 0.5% at 21 785.86 points. The China Enterprises Index of the top Chinese listings in Hong Kong fell 0.2%.

The CSI300 fell 0.9%, while the Shanghai Composite Index was down 0.8% at 2 048.29 points.

"The market right now is doing some selective buying and profit taking, like in the internet sector because they're bearish and some investors may think that it's a little bit too high. The broad market is still well-maintained," said Linus Yip, Hong Kong-based strategist for First Shanghai Securities.

Shares in Internet giant Tencent fell 6.1% after the company announced it was buying a 28% stake in South Korean mobile gaming firm CJ Games for $500m.

Hong Kong web game developer Forgame Holdings Ltd dropped 5.6% while online game developer Kingsoft Corp Ltd tumbled 6.6%, tracking US-listed Chinese tech firms which fell on Wednesday after gaming firm King Digital Entertainment Plc fell as much as 16% in its New York debut.

Shares in CITIC Pacific soared 13.3% after its parent CITIC Group agreed to inject its main operating arm into the Hong Kong-listed unit.

In a filing, CITIC Pacific said it will purchase 100% of CITIC Ltd which had total equity of about 225bn yuan ($36.24bn) at the end of 2013.

Shanghai-listed China Citic Bank Corp rose 1.3% on the news about its parent.

Bank of China Ltd gained 0.6% in Hong Kong and 0.4% in Shanghai, after it posted an above-estimate 11% increase in fourth-quarter profit.

* Fin24 is part of Media24, a subsidiary of Naspers. Naspers has a 34% stake in Tencent.

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