Hong Kong shares climb to 21-month high, China back at May peaks

Wed Jan 30, 2013 9:00am GMT

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* HSI +0.7 pct, H-shares +0.8 pct, CSI300 +0.5 pct

* China railway, property lifted by reported policy cues

* Lenovo slips from 5-yr high ahead of positive Q3 earnings

* Investors cheer ZTE's stronger smartphone forecast

By Clement Tan

HONG KONG, Jan 30 (Reuters) - Hong Kong shares climbed to their highest since end-April 2011 on Wednesday, helped by strength in China-related counters that pushed the Hang Seng Index above a chart level that had put a lid on gains for nearly two weeks.

The CSI300 Index of the top Shanghai and Shenzhen A-share listings rose 0.5 percent, while the Shanghai Composite Index climbed 1 percent in the fourth-highest volume this month. Both closed at their highest since May 2012.

The Hang Seng Index climbed 0.7 percent to 23,822.1, its highest close since April 27, 2011. Gains on Wednesday helped the benchmark close above technical resistance at around 23,708 that had held back gains since mid-January.

In early trade, the Hang Seng briefly breached 23,900, triggering the termination of some callable bear contracts at the 23,800 and 23,900 levels, dealers said. They cited Hang Seng Index January futures expiring on Wednesday as another factor.

The China Enterprises Index of the top Chinese listings in Hong Kong rose 0.7 percent as turnover lingered just below its average in the last month for a third straight session ahead of the end of the U.S. Federal Reserve policy setting meeting later in the day.

"There's still some money sitting on the sidelines, waiting to get into the market, but I won't get too carried away by the rally we have had in the last few weeks," said Larry Jiang, chief strategist at Guotai Junan International Securities.

"We have been pretty stagnant in Hong Kong lately despite strong moves up in the A-share and U.S. markets, so this can be seen as a form of catch-up, but turnover has actually come down over the last week or so," Jiang added.

Chinese property counters rose on Wednesday after the Guangzhou-based 21st Century Business Herald newspaper quoted an unnamed economist, identified as close to policymakers, as saying that Beijing could tolerate house price rises of at most 10 percent this year, after taking inflation, income growth and GDP growth into account.

China Resources Land climbed 2.1 percent to a record closing high in Hong Kong. It is now up 14.7 percent in January after surging 69 percent in 2012. Shenzhen-listed China Vanke jumped 3.8 percent to its highest close since August 2009.

Both were helped by a report in various official Chinese media that more than half of China Development Bank's new loans in 2013 will go to supporting the new leadership's urbanisation agenda.

The official China Securities Journal newspaper also reported that China's railway ministry plans to spend 117 billion yuan buying rail cars this year, up from 108.2 billion yuan in 2012.

Shares of China Railway Construction rebounded 3.9 percent from Tuesday's 1-1/2-month low in Hong Kong, and rose 0.7 percent in Shanghai.

EARNINGS, GUIDANCE IN FOCUS

Chinese oil giant CNOOC Ltd rose 1.9 percent to its highest since Jan. 11 in Hong Kong. After markets closed, CNOOC said it expects oil production could increase up to 2 percent this year compared to 2012, while earmarking $12 billion -$14 billion for exploration, development and production.

ZTE Corp reversed midday losses to end up 1.7 percent in Hong Kong and 1.9 percent in Shenzhen after a senior executive said China's second-largest telecom equipment maker expects smartphone shipments in 2013 to exceed an earlier 50 million unit forecast.

Lenovo Group fell 2.7 percent from Tuesday's more than five year closing high. After markets shut, the world's second-largest personal computer maker reported a record quarterly profit that handily trumped market expectations.

Shares of Lenovo shares have risen 18 percent in January after jumping 35.5 percent in 2012. The stock is currently trading at a 7.5 percent premium over its historical median 12-month forward earnings multiple, according to Thomson Reuters StarMine.

China Unicom gained 1 percent from Tuesday's one-month low in Hong Kong. After markets closed, China's second-largest mobile operator said it expects to post a 50 percent net profit increase for 2012 from a year earlier.

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