* HSI, H-shares +0.1 pct; CSI300 +0.2 pct
* China property, coal extend strong 2013 start
* HSBC rises, Basel III extension helps
* Chinese property strong in HK, but weak in mainland
By Clement Tan
HONG KONG, Jan 7 Hong Kong shares neared a
19-month high on Monday, as investors continued to chase Chinese
property and coal sectors despite signs suggesting that the
rally in some large caps has become stretched.
The Hang Seng Index went into the midday trading
break up 0.1 percent at 23,344.3, nearing its highest level
since June 2011 posted last Thursday. The China Enterprises
Index of top Chinese listings rose 0.1 percent.
In the mainland, the Shanghai Composite Index and
the CSI300 of top Shanghai and Shenzhen listings each
rose 0.2 percent. Gains in Hong Kong and China came in healthy
But all four indexes have relative strength index (RSI)
readings either near or at their highest since October 2010,
suggesting they are technically overbought.
"The rally is starting to look like it's gone a bit too far
ahead of fundamentals, with fast money chasing the high beta
names," said Edward Huang, equity strategist at Haitong
On Monday, HSBC Holdings climbed 1.2 percent after
after global regulators gave banks four more years to build up
cash buffers so they can use some reserves to help struggling
In Hong Kong, Chinese coal producers rose on hopes increased
mainland demand will boost margins as temperatures in China
plunged to their lowest in almost three decades. Higher coal
prices will, however, crimp the profitability of power
Despite coal prices declining last week, according to a
note by Goldman Sachs dated Sunday, Chinese coal stocks have
climbed since Beijing said they would no longer intervene in
annual coal price negotiations between sellers and utilities
starting in 2013.
On Monday, Yanzhou Coal Mining rose 2.3 percent to
return to its highest levels in Hong Kong in almost eight
months, while China Resources Power dipped 3.1
percent, slipping further from a 4-1/2-year high set on Jan. 2.
CHINA PROPERTY SHARES DIVERGE
Chinese property stocks in Hong Kong extended a strong start
to the year in Hong Kong, but were key underperformers in
mainland markets with mainland investors electing to take some
profit after the sector's strong showing in 2012.
Over the weekend, Beijing unveiled detailed measures,
including requiring local governments to allocate enough money
and offering loan subsidises for developers, to ease funding
pressure on its public housing programme this year.
Poly Real Estate fell 1.6 percent in Shanghai
from its highest close since July 2009, which was set on Friday.
The Shanghai property sub-index was a key underperformer
among sectors, down 1.2 percent.
China Resources Land jumped 3.2 percent to a
record high since it listed in Hong Kong in 1997, shrugging off
a downgrade from "buy" to "neutral," by Bank of America-Merril
Lynch analysts, who believe that its recent rally has priced in
its positive rental and property sales and potentially lower
China Resources Land, among the larger property developers
in the mainland, has made a strong start to 2013 after leaping
69 percent in 2012.
But its percentage gain on the day was dwarfed by sector
rivals, whose shares have a bigger beta values, suggesting that
they tend to move by a bigger magnitude than the broader market.
Shares of Shimao Property - which has a beta value
of 1.9, suggesting any move in its price could double the
broader market's -- jumped 5.7 percent to its highest since
September 2009 as investors cheered its plan to issue U.S.
dollar senior notes to refinance existing debt.
Tapping the debt market suggests Chinese companies are
unlikely to tap equity markets to raise funds as developers seek
to increase inventories to meet returning demand, suggesting
equity stakes will not be diluted.
This follows similar successful moves made by Hopson
Development and Country Garden last week to
tap the credit market to raise funds, which were met with robust
demand. On Monday, Hopson shares rose 6 percent, while Country
Garden rose 3.7 percent.