HONG KONG: Chinese stocks edged lower on Thursday, as sentiment weakened after regulators took measures in the previous session to cool the market. As of the midday trading break, the benchmark Shanghai Composite Index declined 0.6% to 4,101.52, on track for its third session of losses to further pull back from a decade-high. The blue-chip CSI 300 Index was down 0.2% after swinging between gains and losses during the morning session. In Hong Kong, the Hang Seng Index declined 0.6% and the tech index dipped 1.8%. The declines have paused a stellar year-start rally, as regulators tightened margin requirements on Wednesday in a surprise move to cool a red-hot stock market that saw turnover and leverage bets hitting records. “We may see some near-term volatility, especially in the tech- and innovation-heavy sectors where we see the most margin financing growth,” analysts at Morgan Stanley said. However, the impact should be temporary and manageable, and regulators’ commitment to a “slow-bull” should “tame the market without causing a material impact on market liquidity,” they added. Leading market losses on Thursday, the CSI Satellite Industry Index tumbled more than 8% after several commercial aerospace concept stocks warned of excessive trading risks. Among other laggards, the defence sector lost 3.8% and AI-related shares declined 1.6%. “We are still uncertain whether this is an isolated issue but believe there is likely more government oversight on the issue, similar to its actions in the past,” said Kai Wang, a senior equity analyst at Morningstar. Alibaba declined 3%. The company launched upgrades to its Qwen artificial intelligence app which more aggressively pushes into consumer-facing AI.