6:00AM New York, 6:00PM Hong Kong - China tightens rules on management incentives for listed companies. Oil refining companies stocks declined.

In Hong Kong trading the Hang Seng Index dropped 2.48% or 651.92 at 25,610.21 and the China Enterprises Index of Hong Kong-listed mainland companies, or H shares, declined 3.64% or 532.98 to 14,118.31.

In Shanghai trade, CSI 300 Index fell 4.73% or 189.57 at 3,821.32.

Daily turnover on main-board was HK$101.3 billion compared with HK$69.74 billion yesterday.

China tightens rules on listed companies management incentives

Xinhua News Agency reported today that the China Securities Regulatory Commission has issued rules on listed companies'' incentive plans to prevent management from insider trading.

According to the CSRC, companies must introduce share option schemes shortly before announcing major decisions, and may not carry out major actions such as new stock issues, asset injections or bond offerings within 30 days after having announced an incentive plan and obtained shareholder approval.

In addition, companies may not introduce an incentive plan during and or within a 30-day period after the announcement and completion of major decisions.

Under the new regulatory regime, shareholders are prohibited from awarding or transferring shares to the object of the incentive plan since some companies have managed to avoid regulatory scrutiny.

Also controlling and major shareholders who hold 5% or more of a company''s shares may not be offered incentive plans without the approval of shareholders.

Microsoft develops $280 million R&D campus in Being

Separately, the online edition reported that Microsoft China yesterday “broke ground” on a $280 million research and development campus in Zhongguancun, Beijing. The campus is expected to be completed in 2010 and will be the company''s main overseas campus. An estimated 5,000 employees will work at the facility.

Zhongguancun, referred to as Beijing''s """"Silicon Valley,"""" was approved by the Chinese government as the first national level high-tech industrial development zone in 1988.

Gainers & Losers

Hong Kong stocks reversed from earlier gains in the morning session to close down 2.5% after rising oil prices negatively affected oil refiners. PetroChina and Sinopec led the decliners in the sector. Financial stocks also traded in negative territory as investors were unnerved by fears over the health of the global economy.

Ping An Insurance fell 4.6% to HK$72.0 on speculation that it will seek regulatory approval its fundraising plan. China Life dropped 3.7%, China Construction Bank plummeted 3% and the Industrial & Commercial Bank of China declined 1.6%.

China Mobile slid 2.8% to HK$132.50.

Oil refiner Sinopec declined 4.5% and PetroChina slumped 5.5% to HK$11.46 after crude prices increased to a record above $122 a barrel. CNOOC Ltd also edged down 0.14 % at HK$13.88.

Alibaba.com Ltd reversed earlier gains to decline 2.6% at HK$15.00 as the gloomy outlook over the world economy downplayed the forecast beating 111% surge in first quarter income.