* HSI -0.1 pct, H-shares -0.4 pct, CSI300 -0.9 pct
* Evergrande tumbles after $561 million new share issue
* China Life Insurance hit by Credit Suisse downgrade
* Short selling builds up for China, HK ETFs
By Clement Tan
HONG KONG, Jan 17 Mainland Chinese shares
retreated further on Thursday from a 7-1/2-month high struck two
days earlier, weighing on Hong Kong markets, with
growth-sensitive counters leading the slide ahead of a slew of
major Chinese economic data due on Friday.
The Hang Seng Index closed down 0.1 percent at
23,339.8 after earlier testing chart resistance at 19-1/2 month
highs at about 23,500. This level has stymied index gains for
more than two weeks.
The China Enterprises Index of the top Chinese
listings in Hong Kong fell 0.4 percent. The Shanghai Composite
Index lost 1.1 percent, while the CSI300 of
the top Shanghai and Shenzhen A-shares shed 0.9 percent.
Shanghai volume on Thursday was the weakest since Jan. 7,
while turnover in Hong Kong only crawled to the highest in a
week because of a $560 million new share placement for Chinese
Losses over the last two days have about halved gains made
on onshore China indexes earlier this week.
Hong Kong-listed exchange-traded funds (ETFs) tracking China
listings accounted for the top three most shorted, suggesting
investors were betting on more index losses. Short selling
accounted for 55 percent of China Asset Management's CSI300
RQFII ETF turnover on Thursday.
"I think people are still just taking profit from the
out-sized jump in the A-share market earlier this week," said
Hong Hao, chief equity strategist at Bank of Communication
"We are early in this rotation into cyclicals at the start
of a new economic cycle in China, so some are still operating as
in a bear market, selling into strength and clocking profits by
rotating swiftly between sectors," Hong added.
Analysts expect Beijing to post a rebound to 7.8 percent
growth in the fourth quarter of 2012 on Friday, its first
quarterly rise in eight. December data for housing prices, urban
investment, industrial output and retail sales are also
On Thursday, China Life Insurance
tumbled 2.4 percent in Hong Kong and 3 percent in Shanghai
despite posting a 40 percent year on year increase in premium
income in December, lifting growth to 1 percent for 2012.
Hong Kong shares of China's largest insurer were hurt by a
downgrade from "neutral" to "underweight" by Credit Suisse
analysts on Thursday, who said its high valuation relative to
sector peers is not justified given an unfavorable 2013 outlook.
Thursday's losses almost pared gains on the week for China
Life's Hong Kong listing. It is still up more than 3 percent in
2013 following a 32 percent surge last year. The Hang Seng Index
is up 2.7 percent in 2013 after jumping 22.9 percent in 2012.
According to Thomson Reuters StarMine, China Life is
currently trading at a 0.7 percent premium to its historical
median forward 12-month earnings multiple. Ping An Insurance
, its biggest rival, is currently trading in Hong Kong
at a 32 percent discount.
In a sign the upcoming earnings season, that picks up after
the Chinese New Year in February, could stall the bright start
to the year, Brightoil Petroleum slumped 11.2 percent
to its lowest since Nov. 30 after it warned of a loss in
HONG KONG PROPERTY CLIMBS, CHINA's SLIPS
Evergrande tumbled 7.1 percent to HK$4.32,
slightly below the HK$4.35 level at which the Chinese developer
priced one billion new shares on Thursday, which was a 6.5
percent discount to its Wednesday's close.
Thursday's losses took Evergrande to its lowest close since
Dec. 31, hurting most of its Chinese property sector rivals
listed in Hong Kong. China Resources Land shed 1.7
percent to its lowest close this year.
Hong Kong property counters climbed after no harsh property
curbs were included in maiden policy speech by the territory's
new chief executive on Wednesday, which instead announced an
increase in land supply.
Sun Hung Kai Properties gained 0.8 percent to its
highest close since April 2011. Henderson Land gained
0.6 percent, stretching gains in 2013 to more than 8 percent
after spiking 42 percent in 2012.
BNP Paribas said the Hong Kong government's discussion with
developers to accelerate pre-sale of residential units could
moderate property price growth and lower the risk of further
tightening measures, which would be positive for developers'
launches and for the sector.