Hong Kong shares creep to new 19-1/2-mth high, China rebounds

Fri Jan 18, 2013 4:45am GMT

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* HSI +0.8 pct, H-shares +1.6 pct, CSI300 +0.7 pct

* China data slightly tops consensus, but volumes subdued

* Growth-sensitive stocks lead gains

* China railway slips in HK after disappointing 2013 budget

By Clement Tan

HONG KONG, Jan 18 (Reuters) - Hong Kong shares climbed to a new 19-1/2-month high on Friday, while the onshore Chinese market is set for its first gain in three days after data showed China snapped seven-straight quarters of declining economic growth.

But volumes were relatively subdued, suggesting investors were looking beyond data that showed the world's second-largest economy growing 7.9 percent in the fourth quarter and 7.8 percent in 2012 from a year earlier.

The Hang Seng Index rose 0.8 percent to 23,514.1 at midday, its highest intra-day level since June 1, 2011. The China Enterprises index of the top Chinese listings in Hong Kong spiked 1.6 percent.

In the mainland, the Shanghai Composite Index rose 0.6 percent, while the CSI300 of the top Shanghai and Shenzhen A-share listings gained 0.7 percent.

"I think today's numbers were broadly in line with what people expected. Sure, it's a trigger for strength in cyclical sectors, but it won't be anything too dramatic," said Wang Aochao, UOB-Kay Hian's Shanghai-based head of China research.

"We have had a pretty dramatic rally over the last few weeks and most are now waiting to see how this economic recovery will translate into earnings recovery," Wang added.

With the next set of economic data not due until March, investors are likely to turn their attention to corporate earnings. Some Chinese companies have begun posting fourth quarter earnings, but the pace of reporting will only pick up after the Chinese New Year next month.

On Friday, the growth-sensitive Chinese banking sector was among the top boosts to benchmark indices. Industrial and Commercial Bank of China (ICBC) rose 1.4 percent in Hong Kong and 1 percent in Shanghai.

ICBC shares in Hong Kong have now surged more than 45 percent from a Sept. 5 low and are now hovering at levels not seen since August 2011. This compares to the 23 percent jump for the Hang Seng Index from the same September day.

Chinese railway stocks counters bucked the broader market to ease after local media reported the railway ministry is earmarking 650 billion yuan for railway development in 2013, up 3 percent on 2012.

Analysts at Bank of America-Merril Lynch, Citi and Deutsche Bank said the budget increase was disappointing.

In Hong Kong, China Railway Construction slid 1.8 percent, while China Railway Group shed 1.5 percent. Both have outperformed in 2012, surging 106 and 86 percent respectively.

CHINA CONSUMER SECTOR STRONG

On top of quarterly and annual GDP figures, data ranging from monthly industrial output to fixed asset investment and retail sales were released on Friday.

China-focused consumer stocks were mostly stronger after the country's statistics bureau said consumption was the largest overall contributor to economic growth last year. The agency also said price levels were largely stable.

China's largest footwear retailer Belle International bounced 2.5 percent, while embattled sports brand Li Ning jumped 4.9 percent, both in Hong Kong.

Shares of Gree Electric Appliances Inc jumped 5.4 percent in Shenzhen after China's largest appliance maker by sales said on Thursday its net profit rose around 41 percent in 2012 on the back of higher sales.

Baoxin Auto surged 8.6 percent after Goldman Sachs added the China auto maker to its conviction list, citing its highest luxury car sales volume mix, its strong control of expenses and earnings boost from its acquisition of NCGA.

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