* HSI down 1 pct, H-shares fall 1.8 pct, CSI300 lose 3.3 pct
* Beijing's Friday move will "freeze" market near term: UBS
* Vanke, Poly Real Estate A-shares down maximum 10 pct
By Clement Tan and Yimou Lee
HONG KONG, March 4 (Reuters) - China's CSI300 share index
could post their worst daily loss in two years on Monday,
deepening losses in Hong Kong, after Beijing hit the mainland
property sector with harsher-than-expected tightening measures
to curb housing costs.
After markets closed on Friday, the State Council demanded
an increase in required down payments and loan rates for buyers
of second homes in cities where prices are rising too quickly.
The announcement came ahead of the start of China's annual
parliamentary meetings on Sunday.
At 0325 GMT, the Hang Seng Index was down 1 percent
at 22,648.5. The China Enterprises Index of the top
Chinese listings in Hong Kong fell 1.8 percent.
In the mainland, the CSI300 of the top Shanghai
and Shenzhen A-share listings was down 3.6 percent, set for its
worst day since January 2011. The Shanghai Composite Index
was down 2.7 percent.
The property sector took a battering, with the Shanghai
property sub-index down 8.7 percent and the Hong Kong
properties sub-index dropping 2.4 percent.
"Friday's evening announcement was very significant and was
beyond the expectations of many in the market," said Hong Hao,
chief equity strategist at Bank of Communication International
"We are in a high risk zone now. I wouldn't advise clients
to add risk in the near term, since property is a huge sector,
so this will have an effect on construction materials and
equipment as well," Hong added.
China Vanke was down by the maximum daily limit
of 10 percent in Shenzhen. If Monday's losses are maintained by
the close of trade, persist, it would be the worst daily loss
for the country's largest developer by sales since August 2009.
Poly Real Estate was also down 10 percent in
Shanghai. In Hong Kong, China Resources Land sank 7.5
percent to its lowest this year.
UBS analysts downgraded their target prices by an average
of 13 percent for 12 Hong Kong-listed Chinese developers they
cover, expecting new measures to "freeze" the entire market and
delay the originally planned sales schedules in the near term.
China's property market has been rife with speculation about
what the country's new leadership may do to curb rising home
prices in the lead up to this week's annual parliamentary
The annual Chinese People's Political Consultative
Conference began on Sunday and the National People's Congress,
where Xi Jinping is expected to be confirmed as president,
starts in Beijing on Tuesday.