Hong Kong shares outshine Asian peers, shrug off weak China markets

Mon Jun 17, 2013 10:07am BST

Related Topics

* HSI +1.2 pct, H-shares +0.8 pct, CSI300 -0.5 pct

* H-share index posts 1st gain in 13 days

* Money rolls into battered Hong Kong large caps

* Clean energy firms aided by China's anti-pollution pledge

* Huijin's A-share purchase lifts NCI, Everbright Bank

By Clement Tan

HONG KONG, June 17 (Reuters) - Hong Kong shares, which fell the past five weeks, outshined most Asian peers at the start of the new one as buyers came into battered counters ahead of a key U.S. monetary policy meeting this week.

Mainland China markets, though, slipped to near six-month lows on Monday. Cement and coal counters were hit by measures - announced late Friday by the State Council - to combat air pollution, which will curb growth of these industries.

The CSI300 of the leading Shanghai and Shenzhen A-share listings slipped 0.5 percent, while the Shanghai Composite Index closed down 0.3 percent at 2,156.21 points.

The Hang Seng Index closed up 1.2 percent at 21,225.9 in a second-straight gain after eight-month lows. The China Enterprises Index of the top Chinese listings in Hong Kong rose 0.8 percent in its first gain in 13 sessions.

Gains on Monday lifted the H-share index from its most technically oversold level since August 2011. It had slumped 5 percent last week, its worst weekly showing in more than a year.

Last week was also the fifth straight losing one for the H-share index.

Hong Kong turnover was the weakest in a week and totalled some 9 percent below its average in the past 20 sessions. Short selling accounted for 8.9 percent of turnover, versus a historical 8 percent average.

"The fast money is rolling into the defensive, Hong Kong large caps that have been hit quite badly by the QE tapering talk in the last few weeks," said Steven Lam, an analyst with Karl Thomson Securities.

U.S. bond yields have spiked, roiling currency and stock markets, particularly in emerging markets, after Federal Reserve chairman Ben Bernanke jolted investors on May 22 by saying the bank might "take a step down" in the pace of bond purchases in coming months.

A two-day meeting of the U.S Federal Reserve policy-making panel ends on Wednesday, with markets looking to Bernanke for fresh hints on when the central bank will pare its aggressive monetary stimulus.

High yielding, defensive Hong Kong property developers were broadly higher, although real estate investment trusts (REITs), recipients of hefty inflows from waves of central bank easing since 2008, underperformed on the day.

Henderson Land climbed 3.6 percent in a second-daily gain, but Link REIT slipped 0.3 percent after recovering some 6 percent in the previous two sessions. Link is still some 16 percent off a peak on May 15.

Cheung Kong Holdings rose 3.7 percent after the company said it will buy Dutch waste processing firm RAV Water Treatment I B.V. for 943.68 million euros ($1.26 billion), as part of an overseas expansion drive that has targeted infrastructure assets offering steady income.

Hong Kong and China Gas jumped 3.8 percent, extending a rebound from a seven-month closing low last Thursday. It is still down 11 percent from a May 20 peak and currently trading at a 6 percent premium in its 12-month forward earnings multiple, according to Thomson Reuters StarMine.

CHINA POLICY AFFECTS ENERGY SHARES

Shanghai volumes neared 2013 lows as money rates remained historically tight. The benchmark seven-day repo rate barely budged from last week's sky high levels, reaching 6.85 percent on a weighted-average basis, compared to 6.90 percent on Friday.

That may remain the case after Financial News, a newspaper backed by the People's Bank of China, reported on Monday that the central bank is unwilling to inject funds into the interbank market because banks in difficulty have likely bypassed regulatory caps on lending.

That aggravated losses for growth-sensitive counters, such as the heavy pollution coal and cement industries. In Shanghai, Anhui Conch Cement dropped 1.8 percent and Yangquan Coal fell 2.8 percent.

But alternative energy stocks were lifted by moves by China's cabinet to fight air pollution, which also involves a pledge to support the solar sector. In Hong Kong, GCL-Poly Energy spiked 7.1 percent to a three-month high.

Chinese property developers listed in the mainland fell after the Beijing municipal government moved to tighten requirements before they are issued permits to sell properties before completion.

China Vanke tumbled 3.4 percent in Shenzhen to its lowest since Christmas. Home price data for May is due on Tuesday.

China Everbright Bank climbed 2.1 percent in Shanghai, while New China Life Insurance soared 5.1 percent in Shanghai and 2.9 percent in Hong Kong after China state investor Central Huijin bought 100 million yuan worth of A-shares in those companies.

Monday's gain cut Everbright's 2013 decline to 2 percent, and spurred rises for other mid-sized banks whose shares have been under pressure from tight interbank funding market.

FILED UNDER: