"I think there's a genuine concern," HSBC executive director Peter Wong said, adding about 40 percent of the local bourse is made up of Chinese stocks.

"If there are any policies that will curb the growth of China, it will directly affect these companies and that will directly affect the stock performance in Hong Kong," he told local radio RTHK.

Wong said recent concerns that the mainland market is overheating were justified and warned the impact would be "quite serious" on the Hong Kong stock market if the Chinese bourse crashes.

He also urged local investors to be extra cautious when making investments.

Wong's comment comes one day after Hong Kong tycoon Li Ka-shing warned about the risks of trading China stocks, saying he was "worried" over the high share prices following their record breaking run.

"As a Chinese, I am worried about the stock market; with P/E being 50/60 times, there is indeed a bubble phenomenon," Li said.

"Of course I do not hope to see a situation when the bubble bursts. It is better for investors to be more careful," he said, adding any fluctuation in Mainland economy would affect Hong Kong.

Last week, the Shanghai Composite Index breached the historic 4,000 points level for the first time, putting stocks there on Price/Earnings Ratios -- a standard measure of valuation -- at about 50 times compared with the Asian average of 14-18, according to analyst estimates.

As the Chinese markets have gone from one record to the next, officials have repeatedly warned of the dangers of a bubble bursting which would hit small investors hardest.

The extent of China's stock market fever was outlined in a recent central bank survey which showed 30.7 percent of the public planned to tap their low-interest savings accounts to buy into equities.