* HSI -0.5 pct, H-shares -0.7 pct, CSI300 -1.6 pct
* Report on A-share ETF redemptions hits mainland investors
* Turnover stays subdued ahead of U.S. election, China
* HSBC slides after saying $1.5 bln fine expected
By Clement Tan
HONG KONG, Nov 6 China shares were headed for
their worst day since Oct. 26 and weighing on the Hong Kong
market, with retail investors worried by a state media report
about substantial redemptions of the mainland's exchange-traded
funds (ETF) last week.
Turnover in both mainland and Hong Kong markets on Tuesday
remained subdued ahead of the U.S. presidential elections later
in the day and the mainland's once-in-a-decade political
transition that starts with the 18th Party Congress meeting on
The Hang Seng Index went into the midday trading
break down 0.5 percent, while the China Enterprises Index
of the top Chinese listings in Hong Kong shed 0.7
The CSI300 Index of the top Shanghai and Shenzhen
listings dived 1.6 percent, while the Shanghai Composite Index
was down 1.5 percent. Both indices underperformed Asian
"If redemptions were so high last week when the market had a
good week, it shows that institutional investors still lack
confidence in the market and retail investors have reacted
accordingly," said Cao Xuefeng, head of research at Huaxi
Securities in Chengdu.
The state-run China Securities Journal reported on Tuesday
that last week was the fifth one this year in which redemptions
by institutional investors in ETFs tracking mainland markets
topped 2 billion units.
This was despite the fact that last week was the best one in
a month for the Shanghai Composite and CSI300 indices. They rose
2.5 percent and 2.6 percent respectively.
Chinese financials and growth-sensitive names, among the
stronger recent outperformers, suffered some of Tuesday's the
bigger percentage losses. In a measure of the broad weakness,
only 13 of the 300 components on the CSI300 Index were higher at
China Railway Construction slipped 3
percent from a 14-month high in Shanghai while losing 1.9
percent in Hong Kong. It is still up 34.6 percent in Shanghai
and 89.7 percent in Hong Kong for the year.
This compares to the 18.7 percent rise for the Hang Seng
Index, 7.6 percent gain for the China Enterprises Index and the
3.4 percent loss on the CSI300 Index in 2012.
Shares of Industrial and Commercial Bank of China (ICBC)
, the country's largest lender, shed 0.6
percent in Hong Kong and 1.3 percent in Shanghai.
BROAD-BASED WEAKNESS IN CHINA AND HONG KONG
Other key underperformers in Hong Kong include HSBC Holdings
Plc , down 1.7 percent after Europe's largest
bank said a U.S. fine for violating federal anti-money
laundering laws could cost significantly more than $1.5 billion
and is likely to lead to criminal charges as well.
China Merchants Holdings slumped 5.8 percent to
HK$24.40, its lowest since Oct 17 after an undisclosed investor
raised $84 million after selling 27 million shares in a deal
priced between HK$24.20 and $25.10, representing a discount of
6.6 percent to Monday's HK$25.90 close.
Kweichow Moutai lost 2.6 percent in Shanghai
despite mainland media reporting that the producer of Chinese
premium liquor denied rumours that it had inventories almost
equal to two years supply and could face a collapse in its