Hong Kong shares slip from 19-1/2-month high, China weaker too

Wed Jan 23, 2013 5:11am GMT

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* HSI -0.2 pct, H-shares -0.6 pct, CSI300 -0.4 pct

* HSI tests 23,708 chart resistance in early trade

* China coal plays down, as beta plays retrace gains

* AIA bucks trend as investors opt for earnings safety

By Clement Tan

HONG KONG, Jan 23 (Reuters) - Hong Kong shares slipped from a 19-1/2-month high on Wednesday, while China slipped further from a 7-1/2 month high, dragged by weakness among growth-sensitive counters as indexes faltered at chart resistance levels after a strong start to the year.

The Hang Seng Index went into the midday trading break down 0.2 percent at 23,606.5 after earlier testing chart resistance seen at about 23,708, its high on May 31, 2011.

The China Enterprises Index of the top Chinese listings in Hong Kong fell 0.6 percent.

In the mainland, the Shanghai Composite Index and CSI300 of the top Shanghai and Shenzhen A-share listings were each down 0.4 percent, retreating further from Monday's 7-1/2 month high.

Both onshore Chinese indexes have bounced 18 and 23 percent respectively from a Dec 3 low. The Hang Seng and China Enterprises indexes are up 4.2 and 6 percent respectively this month.

"We have risen by quite a bit in a very short time, so investors have been taking some profit in the last week or so, looking for new ideas to rotate into," said Larry Jiang, chief strategist at Guotai Junan International Securities.

Chinese coal producers were key sources of weakness. The sector has been hit by two profit warnings earlier this week and Goldman Sachs warned there could be more in store, with Yanzhou Coal identified as a likely candidate.

Yanzhou Coal shares in Hong Kong fell 0.4 percent, while shedding 1.9 percent in Shanghai after Goldman analysts said they expect disappointing full year 2012 earnings for the sector and see downside risks to consensus for the the following year on prolonged coal price weakness.

According to Thomson Reuters StarMine, 4 of 29 analysts have revised their earnings-per-share estimates for Yanzhou Coal by an average of 12.9 percent in the last 30 days.

Shares of China Shenhua Energy Co Ltd, the country's largest producer, shed 0.5 percent in Hong Kong and 1.1 percent in Shanghai.

Asian insurance giant AIA Group climbed 2.2 percent as investors begin to position themselves in companies likely to fare better in the upcoming corporate earnings season.

Chinese railway counters were again weak after an outstanding 2012 and a strong start to 2013. China Railway Construction set to see a sixth-straight daily loss in Hong Kong, tumbling 3.1 percent to its lowest since Nov. 28.

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