* HSI flat, H-shares +0.3 pct, CSI +0.5 pct
* Shimao to tap credit market, offshore China property
* HSBC, StanChart up, Basel ruling helps
* China railway counters up after Beijing touts urban
By Clement Tan
HONG KONG, Jan 7 Hong Kong shares held steady
just off a 19-month high on Monday, as investors continued to
chase the Chinese property and resources sectors despite signs
suggesting that the rally in some large caps has become
The Hang Seng Index ended flat at 23,329.8, nearing
levels set last Thursday that were its highest close since June
1, 2011. The China Enterprises Index of top Chinese
listings in Hong Kong rose 0.3 percent.
In the mainland, the CSI300 of top Shanghai and
Shenzhen listings rose 0.5 percent, while the Shanghai Composite
Index gained 0.4 percent. Both hit at their highest
close since mid-June.
Gains came in fairly robust volumes in both onshore and
offshore China markets as their respective relative strength
index (RSI) values suggest all four indexes were either at or
near their most overbought levels in more than two years.
"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 rose 1.3 percent,
while Standard Chartered Bank gained 0.9 percent 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
Monday's gains extended a steady climb for coal counters
since Beijing said they would no longer intervene in annual coal
price negotiations between sellers and utilities starting in
Yanzhou Coal rose 1.7 percent to close at its
highest since May 2012, while China Resources Power
dipped 3.5 percent, slipping further from a 4-1/2-year high set
on Jan. 2.
Chinese railway counters and other mass transportation
counters rose after official media reported Beijing's 10-year
plan for urbanization could spur 4 trillion yuan worth of
investment between 2011 and 2020.
China Railway Group rose 2.8 percent in
Hong Kong and 3.4 percent in Shanghai.
Also, strong in the mainland markets were China's moribund
B-share market, mainland shares priced in foreign currencies.
B-shares indexes in Shanghai and Shenzhen
jumped 3.4 and 2.5 percent respectively on anticipation of more
B-shares relisting in Hong Kong after Livzon Pharmaceutical
Group Inc said trading in its shares will be
suspended starting Monday.
CHINA PROPERTY A-H SHARE DIVERGENCE
Chinese property stocks in Hong Kong extended a strong start
to the year in Hong Kong, but were underperformers in mainland
markets as investors chose 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 1.8 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 0.9 percent.
But in Hong Kong, smaller Chinese developers - whose shares
have bigger beta values - saw the bigger percentage gains on the
day after Shimao Property became the latest to tap the
Shimao shares, whose beta value of 1.9 suggests any move in
its share price could double the broader market, jumped 3.3
percent to close at 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 6.2 percent, while Country
Garden rose 3 percent.