* HSI -1.4 pct, H-shares -2 pct, CSI300 -1 pct
* Volumes stay weak as beta plays slide after weak China Q1
* Chinese gold miners hurt by slumping gold prices
* Zoomlion tumbles to 1-1/2-year low after Q1 profit warning
By Clement Tan
HONG KONG, April 15 China shares posted their
worst loss in more than two weeks on Monday, while Hong Kong
nearly erased most of last week's gains after
weaker-than-expected China GDP data aggravated the gloom from
several Chinese corporate profit warnings.
China's economic recovery unexpectedly stumbled in the first
three months of 2013 to 7.7 percent from the previous quarter's
7.9 percent and below an 8.0 percent Reuters poll consensus,
sparking a broad sell-off in cyclical sectors.
The Hang Seng Index declined 1.4 percent to 21,772.7,
almost paring last week's gains that came in low turnover. The
China Enterprises Index of the leading Chinese listings
in Hong Kong sank 2 percent.
The Shanghai Composite Index shed 1.1 percent and
the CSI300 of the top Shanghai and Shenzhen A-share
listings lost 1 percent. Both closed at their lowest since March
28, with gold miners among the biggest drags after gold prices
sank to a 2-year low.
Shanghai volume increased slightly from Friday, but was
still some 24 percent below its average in the last month, the
tenth session it had remained under that level. Hong Kong
turnover was 16.5 percent below average.
"This drop in gold prices is a precursor to more volatility
in the stock markets. I won't be adding excessive risk before
China's second quarter data," said Hong Hao, chief strategist at
Bank of Communication International Securities.
"The bad market reaction today is a result of raised
expectations after last week's credit growth figures. This China
GDP miss probably points to ineffectual credit growth because
money is being used by companies to pay off short-term loans and
interest," Hong added.
Expectations for a stronger growth figure were elevated last
week when data showed total social financing, the central bank's
broad measure of liquidity in the economy that includes non-bank
lending, surged to 2.54 trillion yuan ($410.2 billion) in March
from February's 1.07 trillion yuan.
On Monday, Chinese oil major CNOOC Ltd was among
the biggest drags on the Hang Seng Index, diving 3.1 percent to
its lowest closing level since June with Brent oil gravitating
back towards a 9-month low set last Friday.
Now trading at HK$13.74, chart support is next seen at
HK$13.18, its June 5 trough. A break below this level may point
to more losses ahead. It is now down nearly 20 percent this
year, compared with the Hang Seng Index's 4 percent loss.
Chinese gold miners were among the bigger percentage losers
in the A-share market as gold prices extended a downward spiral
on Monday after posting last Friday its biggest one-day slide
Zijin Mining tumbled 5.6 percent in
Shanghai and 7.2 percent to its lowest close since July in Hong
Kong. Its H-share listing is now down 24 percent this year,
compared with the 9 percent slide for the China Enterprises
In a bi-weekly client note, Chinese brokerage CICC said they
expect the H-share index, which closed on Monday at 10,440.8, to
reach 12,000 by the end of the June, while also slightly raising
their end-2013 target to 12,800 from 12,500.
"We see material domestic policy tightening less likely
anytime soon," they said in the same note, released before
Monday's slew of China economic data announcements.
"Instead, with the expansionary fiscal and moderate monetary
policy, we expect industrial output growth to reaccelerate over
coming months, driven mainly by continued strength in fixed
asset investment and still accommodative liquidity," they added.
BAD DATA ADDS TO PROFIT WARNING GLOOM
The slew of China data release on Monday also saw March
industrial output growing 8.9 percent from a year earlier
against expectations for 10 percent, retail sales rising 12.6
percent versus estimates for 12.5 percent.
Quarterly fixed-asset investment grew 20.9 percent in the
first quarter from a year earlier, lower than expectations for
21.3 percent. This added to jitters after Zoomlion Heavy
Industry warned on Friday that its first
quarter net profit may drop by up to 80 percent.
JP Morgan analysts said in a note that Zoomlion's weak first
quarter result may trigger further cuts in earnings
expectations, flagging mounting destocking pressures and its
rapidly rising ratio of potential bad debt.
Zoomlion's shares in Hong Kong dived 8.3 percent to its
lowest closing level since Sept. 26, 2011. The H-share listing
of China's second-largest construction equipment maker has
plunged 34 percent in 2013. Its A-share listing shed 5.5 percent
in Shenzhen and is now down 17 percent this year.
Another cyclical counter, China National Materials Co Ltd
tumbled 5.9 percent after warning it expects to post a
substantially decreased first quarter net profit from the year
before due to increasing market competition.