Hong Kong shares up, Shanghai flat, relief China GDP as forecast
(Updates to close)
* HSI rises 0.4 pct, slumps 3.6 pct this week
* CSI300 inches up 0.1 pct, down 0.9 pct on week
* Weak volumes point to entrenched market scepticism
* China banks cut losses on the week, June lending data supports
* China power producers slide on flat power output growth
By Clement Tan and Vikram Subhedar
HONG KONG, July 13 (Reuters) - Hong Kong shares ended their worst week in two months on a slightly brighter note on Friday as investors registered relief that a slowdown in China's economic growth to 7.6 percent in the second quarter was no worse than expected.
Investors are wary, however, of the hit corporate profits could take with full-year growth in the world's second largest economy on course for its softest showing since 1999.
Onshore Chinese markets were flat, though a slump in trading volume on the Shanghai bourse, down 30 percent from Thursday, showed the lack of conviction in the market.
Wariness stemmed in part from other data released on Friday, notably flat growth in power output in June after small increases in May and April, that raised questions over how the economy grew as fast as reported in the second quarter without a similar surge in power generation.
"The China premium is gone," said Kathy Xu, investment manager for Hong Kong and China equities at Aberdeen Asset Management.
"I would avoid sectors with exposure to exports because they don't have the competitive edge any longer. I'm not very keen on cyclicals," she added.
The Hang Seng Index crept up 0.4 percent, while the China Enterprises Index of the top Chinese listings in Hong Kong rose 0.8 percent. Turnover on the most anticipated trading day this quarter declined 20 percent from Thursday.
The Hang Seng was down 3.6 percent for the week, while the China Enterprises index was down 4.6 percent, their worst showing since the week ending May 20.
In the mainland, the Shanghai Composite Index closed flat, while the large cap-focused CSI300 Index inched up 0.1 percent. This week, they lost 1.7 and 0.9 percent respectively.
Bank lending data released after the market's close on Thursday that showed lending hit a three-month high in June helped the battered Chinese banking sector put in a stronger performance.
China Construction Bank (CCB) rose 0.6 percent in Hong Kong to bounce off Thursday's nine-month closing low. Industrial and Commercial Bank of China (ICBC) gained 0.8 percent in Hong Kong and 0.3 percent in Shanghai.
The Chinese banking sector had come under pressure earlier this week on renewed bad debt concerns after Caixin magazine reported that China Construction Bank (CCB) would be owed 3 billion yuan if a troubled Hangzhou-based conglomerate defaults on outstanding debt estimated at 8 billion yuan.
China-exposed shoe retailer Belle International jumped 4 percent after posting better-than-expected same store sales (SSS) growth in the second quarter.
Belle is now up 0.9 percent this year, compared to 3.6 percent gain on the Hang Seng Index. Before Friday, it was currently trading at 12-month forward earnings multiple that is a 25 percent percent discount to its historical median, according to Thomson Reuters StarMine.
China's consumer sector has otherwise suffered a series of downbeat news in recent days, with subdued inflation and weak import data suggesting that domestic demand was softening more than expected.
CHINA POWER PRODUCERS CREAMED AFTER TEPID DATA
Chinese power producers were standout underperformers after data showed China June power output was flat year on year after rising 2.7 percent in May and rising 0.7 percent in April.
Given the correlation between power usage and economic growth, some market players said weak power output figures could be a sign that the economy in the mainland was less healthy than the GDP data suggested.
"I don't think we have seen the bottom of this slowdown yet," said Hong Hao, Bank of Communication International Securities' chief equity strategist.
"We are still in the middle of a destocking cycle, which means there's little investment and earnings will continue to be adversely impacted," he added.
Datang Power slumped 4.2 percent in Hong Kong and 2.4 percent in Shanghai, while Huaneng Power lost 2.2 percent. Huaneng Power said it produced 1.5 percent less electricity at its power plants in China in the first half of the year, compared to 2011. (Editing by Simon Cameron-Moore)
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