Hong Kong, China shares rise on solid econ data; coal, cement strong

Mon Aug 12, 2013 5:56am BST

Related Topics

* HSI +1.7 pct, H-shares +2.4 pct, CSI300 +1.7 pct

* China data helps lift traditional cyclicals

* Gains come in improved turnover as bearish bets trimmed

* Tencent adds to 2013 rise ahead of Wednesday earnings

By Clement Tan

HONG KONG, Aug 12 (Reuters) - Hong Kong and China shares started the week strongly as solid economic data released late Friday on the world's second-largest economy buoyed cyclical sectors from coal to cement and heavy machinery.

Monday's gains came in the highest Hong Kong midday turnover in about a month, while Shanghai volumes also improved, suggesting investors could be returning, mostly to cut some bearish bets.

At midday, the Hang Seng Index was up 1.7 percent at 22,170.7 points, its highest in a week. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 2.4 percent.

The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 1.7 percent, while the Shanghai Composite Index gained 1.3 percent. Both were at their highest intra-day levels in about a month.

"We are seeing some follow-through momentum from last week's China data that is lifting some more pressure on the traditional cyclical sectors like coal and cement," said Alex Wong, Ample Finance's director of asset management.

"There has to be an element of short covering given how heavily shorted some of these names were before last week, but it's all about positioning," Wong added.

China data released after markets shut on Friday showed new bank loans and money supply grew better than expected in July, even though a broad measure of liquidity fell from the previous month.

Mid-sized lender China Minsheng Bank spiked 6.2 percent in Hong Kong and 4.4 percent in Shanghai. Ping An Bank rose 4.3 percent in Shenzhen and Industrial Bank gained 5.3 percent in Shanghai.

Coal and cement counters extended recent gains as physical prices showed nascent signs of improvement.

Yanzhou Coal , whose Hong Kong shares have seen short selling interest total at least 14 percent in the past three weeks, soared 7.1 percent to its highest in about seven weeks.

Cement counters were also buoyed by a 80 percent spike in first half net profit for China Resources Cement, sending its shares up 3.4 percent to their highest since late April.

Shares of cement makers could diverge in coming days as others report earnings in this sector seen heavily affected by Beijing's drive against overcapacity.

CR Cement was among those that issued positive profit alerts, but there were some with negative warnings, including Shanshui Cement, whose shares were up 4.1 percent on Monday.

China Everbright climbed 1.9 percent after Beijing elevated the environmental protection sector to "pillar industry" status under a plan to increase spending in technology to save energy and tackle China's dire pollution.

EARNINGS IN FOCUS

Companies reporting earnings on Monday include Foxconn International, whose shares fell 2.4 percent after closing on Friday at their highest in about two weeks. Chinese internet giant Tencent Holdings, which reports interim earnings on Wednesday, rose 2.5 percent.

Up 47 percent this year, Tencent is now trading at 28 times forward 12-month earnings, a 4 percent premium to its historical median, according to Thomson Reuters StarMine. In the last 30 days, six of 36 analysts have upgraded their full year earnings-per-share estimates for Tencent by an average of 1 percent.

Shares of Li Ning, China's best-known sportswear brand, fell in spite of reporting a smaller-than-expected first half net loss. The stock fell as much as 12 percent before recovering to be 4.4 percent down after the company said inventory levels were close to normal.

Solar power producer GCL-Poly Energy fell 2.4 percent after warning of a wider loss for the first half compared with a year ago.

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