China shares eke out 3rd straight gain, property strong again

Wed Dec 26, 2012 8:06am GMT

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* CSI300 +0.4 pct, Shanghai Comp +0.3 pct

* Hong Kong to resume trading on Thursday

* Poly Real Estate at 3-year closing high

* Vanke suspended, B-shares to reportedly relist in HK

By Clement Tan

HONG KONG, Dec 26 (Reuters) - Mainland China shares reversed midday losses to edge higher for a third straight day, with the property sector strong as investors found cheer in a media report outlining Beijing's plan to further urbanise China.

Investors took profit on the Chinese banking sector on Wednesday after the country's vice finance minister warned of rising risks in the banking sector and pressure on government revenue in 2013.

Hong Kong markets have been closed since midday on Monday for the Christmas holiday and will resume trading on Thursday.

The CSI300 of the top Shanghai and Shenzhen listings closed up 0.4 percent at 2,457.6. The Shanghai Composite Index crawled up 0.3 percent. Both indexes closed at their highest levels since July 6.

Gains on Wednesday came in good volume as both indexes stayed above their 200-day moving average, a level they closed decisively above on Tuesday after strong gains that pushed the Shanghai Composite Index into positive territory for 2012.

After languishing in negative territory for almost six months, both onshore Chinese indexes are now set for their first annual gain in three years. Their 14-day relative strength index (RSI) readings also suggest they are at their most overbought level in more than two years.

"Investors are consolidating strong gains yesterday, but sentiment has clearly changed for the better," said Zhong Hua, a Shanghai-based equity strategist with Guotai Junan Securities.

"Not too long ago, property stocks would have suffered if there were headlines like today, reiterating purchasing curbs for next year. Instead, they are extending strong gains on hopes of better demand from urbanisation policies," Zhong added.

Poly Real Estate rose 2 percent to close at its highest since November 2009 in Shanghai.

Shares in China's second-largest property developer by sales are now up 57.2 percent in 2012, compared with rises of 4.8 percent for the CSI300 and 0.9 percent for the Shanghai Composite.

The official Shanghai Securities News on Wednesday reported Beijing's policy focus on urbanisation will likely involve reforms in the so-called hukou, or household registration, system to help smaller, rural cities catch up with their biggest cousins in development.

Investors in property shares were unfazed by a report by the official Xinhua news agency on Tuesday saying China will extend its property tightening policies into 2013 to choke speculative buying while expanding its trial property tax.

Trading in shares of China Vanke Co Ltd, Poly Real Estate's larger sector rival, was suspended in Shenzhen on Wednesday pending an announcement, the firm said late on Tuesday.

Local media reported that the company plans to convert its Shenzhen-listed B shares, denominated in Hong Kong dollars, into a Hong Kong listing.

In May, the official China Daily newspaper reported that Vanke had bought a 73.9 percent stake in Hong Kong-listed Winsor Properties Holdings in its first step in its "long-term overseas expansion plans."

CHINA BANKS TRIM DECEMBER GAINS

Limiting index gains on Wednesday, Chinese banking shares slid, trimming their recent outperformance, after the vice finance minister said the country's banking assets have been growing rapidly in recent years, with bank loans climbing to new highs.

Among the country's "Big Four" banks, Industrial and Commercial Bank of China (ICBC) declined 1.5 percent in Shanghai after closing at a six-month high on Tuesday. ICBC is on track for a third-straight monthly gain and its decline for the year has been cut to about 4 percent.

Smaller rival Bank of Beijing dropped 1.4 percent after closing on Tuesday at its highest since May 2011. It is still up 27 percent in December, which should be its best month in 3-1/2 years.

Much of the rally in the banking sector this month has come after China's insurance regulator abolished limits for insurance firms' investments in the country's banks. Previously, firms were unable to invest in more than two banks if they owned more than 5 percent of any single bank.

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