Shares in Hong Kong closed lower Monday, as China Mobile ( CHL) and Alibaba.com ( ALBCF) sank on stock-specific news, and investors seized the day to take profits after the Hang Seng hit a three and a half month high last week.

The Hang Seng finished 57 points, or 0.2% lower, at 26,183.95, but mainland-listed A shares rose after local news reports that CITIC Securities and Haitong Securities will be permitted to offer margin financing and short-selling facilities to domestic investors. The Shanghai Composite Index gained 68 points, or 1.8%, to 3761.01.

Japanese markets were closed for a holiday, and reopen Thursday.

"The Hong Kong market has recovered about 50% since its October selloff. We are in a junction now in terms of market direction, and you have to decide whether to go left or right," says Winson Fong, who runs $500 million for Societe Generale Asset Management in Hong Kong. "I'm not particularly bearish at this point. The only concern is how much downward revision of earnings comes through. When you see rising costs, profit margins get squeezed."

An announcement that more Chinese mainland funds will be allowed to invest in Hong Kong failed to give a boost to momentum shares in Hong Kong. Dealers cited an absence of activity from long-only Japanese funds due to the national holiday there. Market turnover was moderately strong but slightly weaker than Friday, at HK$74 billion ($9.5 billion).

China Watch: India vs. China

Alibaba.com tumbled 5.9%, to HK$15.24, after major shareholder Yahoo! ( YHOO)failed to reach a sale agreement with Microsoft ( MSFT) Saturday. Yahoo! owns 39% of Alibaba.com, which is China's largest e-commerce firm by market cap.

If you liked this article you might like

Asia: Japan Rallies on Yen Trade

Asia: Japan Rallies on Yen Trade

Asia's Stocks Rise, Led by Rally in Japan

Asia's Stocks Rise, Led by Rally in Japan

Asian Markets Slump Monday

Asian Markets Slump Monday

China Aftershock Seen Rattling Stocks

China Aftershock Seen Rattling Stocks

Shanghai Stock Market Falls After Quake

Shanghai Stock Market Falls After Quake