In a decline reminiscent of the late February fall in Chinese equity prices, the Hang Seng plummeted 5% on Monday, 1,526 points, to 28,942.32, in the index's largest one-day point fall to date. Shares in China fell 143 points, or 2.5%, to 5,634.

The big losses were spurred by comments made by Chinese Premier Wen Jiaobao about the potential overheating of China's equity markets, and news of delays in Chinese mainland retail investors being allowed to buy Hong Kong listed shares.

"Valuations in China and India are very stretched so we do think markets are going to struggle now over the next few weeks," says Tim Rocks, a strategist at Macquarie Bank in Hong Kong. "You're going to get rounds of concern about credit losses too, and it's going to be a more challenging environment."

Momentum-driven blue chips led the selling in Hong Kong. In telecoms, China Mobile ( CHL) tumbled 7%, to HK$141.60, China Unicom ( CHU) plunged 8.3%, to HK$16.12, while China Netcom ( CN) dived 5.4%, to HK$21.05, and China Telecom ( CHA) fared similarly, down 8.5%, to HK$5.8.

In financials, China Life Insurance ( LFC) slipped 4.8%, to HK$47.80, and HSBC Holdings ( HBC) lost 1.62%, to HK$145.90.

Property stocks fared badly, too. Cheung Kong Holdings ( CHEUY) fell 5.6%, to HK$132.8, while Sun Hung Kai Properties ( SUHJY) lost 6.1%, to HK$12, and Hutchison Whampoa ( HUWHY) eased 4%, to HK$86.95. That's bad news for US-ETF iShares Hong Kong ( EWH), which is invested nearly 25% across those 3 companies.

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