China shares muted; investors worry about Beijing's crackdown



SHANGHAI, Aug 5 (Reuters) - China shares were subdued on Thursday, though investors took cues from state media reports to dump online gaming companies, fertilizer producers and spirit makers as they worried these sectors could be the next target of a government crackdown.

** Hong Kong stocks fell, dragged by tech and real estate stocks.

** China's blue-chip CSI300 index .CSI300 fell 0.1% to 4,976.61 at the end of the morning session, while the Shanghai Composite Index .SSEC gained 0.1% to 3,480.39.

** In Hong Kong, the Hang Seng index .HSI dropped 0.2% to 26,374.56, while the Hong Kong China Enterprises Index .HSCE lost 0.5% to 9,374.24.

** Online gaming stocks in both China and Hong Kong, which slumped on Tuesday after a state media report labelling the industry "spiritual opium", resumed slides on Thursday, as official Securities Times called for healthy development of the sector.

** Tencent Holdings 0700.HK — China's largest social media and video game firm — fell 1.7%. Rivals NetEase Inc 9999.HK , XD Inc 2400.HK and Perfect World 002624.SZ all dropped.

** Chinese vaping firms, including Huabao International Holdings Ltd 0336.HK and China Boton Group Co Ltd, 3318.HK slid after state media reported many minors are able to purchase e-cigarettes in the country despite a ban on sales to under-18s.

** Investors scrambled to exit chemicals makers such as Luxi Chemicals Group 000830.SZ and Yunnan Yuntianhua Co 600096.SS on news that China is probing into chemical fertilizer companies over price gouging.

** Growth hormone stocks, including Changchun High & New Technology Industries 000661.SZ and Anhui Anke Biotechnology (Group) Co 300009.SZ tumbled, after state media issued a new warning that such products do damage to people's health.

** Investors also dumped spirit makers, including Kweichow Moutai Co 600519.SS and Luzhou Laojiao Co 000568.SZ , as they were spooked by an article on the Ministry of Science & Technology's website that linked alcohol with some types of cancers.
Reporting by Shanghai newsroom; editing by Uttaresh.V

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