BEIJING -- The Hang Seng Index added 0.1% to close at 16,481 in Hong Kong Monday. But the Shanghai Composite Index was in negative territory, losing 0.3% to 1660.

In New York Friday, China technology stocks broadly fell along with the declining Nasdaq. Shanda ( SNDA) fell 0.9% to $13.26; The9 ( NCTY) was off 2.5% to $23.39; and China Finance Online ( JRJC) slid 3.1% to $5.29.

With most of the big U.S. tech outfits having reported second-quarter earnings, their China counterparts are preparing to follow suit. Lead China search engine Baidu will kick off the second-quarter earnings season on July 26 with portal Sohu following the next day.

After the stock market carnage that's ensued from a shift in mobile operator regulatory policies announced early in July, investors can take a kind of solace in knowing at least there isn't much more downside for many wireless names. Amid a rash of earnings warnings from wireless providers, investors now appear to have priced in a nuclear scenario.

The biggest wireless player, Tom Online ( TOMO), has lost 28% of its value since the policies were announced on July 6, based on Friday's closing price of $12.25. (The stock also lost ground for a couple of weeks before the announcement on rumors of the pending change).

In a note on the upcoming earnings season, Piper Jaffray analyst Safa Rashtchy says he expects China wireless companies to post in-line results, helped by strong demand for search and advertising, though he believes revenue and earnings guidance for the third quarter may be 15% to 30% below current estimates.

But Rashtchy adds that the wireless issue probably won't drag the Internet sector down any more than it already has. "In fact, we believe there is likely to be more clear segmentation of the sectors and a shift of investor interest to the ad-based companies like Focus Media ( FMCN), search companies and online services like 51Job ( JOBS)," says Rashtchy in a note.

Focus Media will likely post the strongest quarter among China tech plays, while Sohu ( SOHU) should benefit from strong momentum in its ad business, he adds.

Meanwhile, on the economic front in China, late Friday the People's Bank of China imposed another tightening measure aimed at slowing the runaway economy. The bank said it would increase the reserve requirement ratio by 0.5 percentage points to 9%, starting Aug. 15.

The move increases the amount of reserves that banks must keep with the central bank, effectively slowing lending. It came just days after official data showed GDP growth checked in at a strikingly high 11.3% in the second quarter of 2006.

The GDP report issued last Tuesday prompted much speculation about what the government must do to cool the economy, with most analysts predicting some combination of interest rate hikes, increase in the reserve requirement, and moves to allow greater appreciation of the yuan.

After Friday's reserve requirement boost, economists continue to believe more tightening is in store.

"Given the signs of overheating in China, which now include accelerating inflation, we expect additional measures, including another 27 basis points lending rate hike, could come at any time," says ING economist Tim Condon in a note on Monday.

In a separate policy shift that could have more of a long-term cooling effect, government authorities said Friday that they've given the green light for three large Chinese banks to make $4.8 billion in purchases of overseas stocks and bonds under what's known as the Qualified Domestic Institutional Investor (QDII) scheme.

China-based money managers have been angling for such quotas so they can invest a portion of customer assets in foreign markets. In the past, the government has been reluctant to allow substantial outflows of investment, partly for fear of undermining China's own stock markets.

But double-digit gains in the Shanghai Composite Index have eased those worries.

Diverting even a very small percentage of assets out of banks, where the vast majority of Chinese savings now reside, could have the welcome side effect of dampening excessive lending. Many analysts believe banks have too freely lent money for wasteful and speculative projects over the past few years, leading to overheating in the property sector and other areas.