* HSI -1.1 pct, H-shares -1.3 pct, CSI300 +0.4 pct
* Shanghai Composite set for biggest quarterly gain in 3
* Shanghai free trade zone "concept" stocks rise after zone
* Bourse volumes dim ahead of one-week China holiday
* Weak China flash PMI aggravates HK losses
By Clement Tan
HONG KONG, Sept 30 China shares inched higher on
Monday, outperforming other Asia markets as investors chased
strength in retailers ahead of a week-long holiday, with the
Shanghai benchmark heading for its biggest quarterly gain in
But Hong Kong markets sank to their lowest in two weeks,
hurt by a subpar reading in a private survey on factory activity
in the mainland and fears that a U.S. government shutdown seemed
At midday, the CSI300 of the leading Shanghai and
Shenzhen A-share listings was up 0.4 percent, while the Shanghai
Composite Index climbed 0.6 percent.
On the quarter, they are up 9.3 and 9.8 percent,
respectively -- the best for the Shanghai benchmark since the
third quarter in 2010.
The Hang Seng Index sank 1.1 percent to 22,951.5
points, its lowest since Sept. 13. The China Enterprises Index
of the top Chinese listings in Hong Kong sank 1.3
percent. If losses hold, this would be their biggest daily loss
since Aug. 28.
On the quarter, they are up 10.3 and 11.3 percent,
Volumes in both Hong Kong and mainland markets were light
ahead of a holiday. Hong Kong will be shut Oct. 1, and the
mainland Oct. 1-7.
"On a normal day, the A-share market will probably have
dipped given the negative surprise from the flash PMI, but this
is the eve of a one-week holiday," said Guo Yanling, an analyst
with the brokerage firm Shanghai Securities.
Suning Appliance jumped 6.9 percent in Shenzhen
and BesTV New Media surged 10 percent in Shanghai
after local media fanned hopes that electronic retailers will
enjoy positive sales over the week-long Golden Week holiday.
The final HSBC Purchasing Managers' Index (PMI) edged up to
50.2 in September from August's 50.1, although that was well
below last week's flash reading of 51.2, with domestic orders
proving to be weaker than preliminary estimates suggested.
China's official PMI will be released on Tuesday.
Chinese banks fell in Hong Kong, but rose in the mainland as
investors were reassured by a central bank statement on Sunday
that it would keep policy steady with timely fine-tuning to cope
with economic uncertainties.
"After the holiday, the main focus will be the 3rd plenum
policy-setting meeting in November, which will raise expectation
of policy support. The central bank statement sets the tone for
macro policy," Guo added.
China Merchants Bank rose 1.4 percent
in Shanghai, while falling 1.8 percent in Hong Kong.
The mainland banking regulator said loan-to-deposit ratios
and other regulatory requirements related to cross-border
financing for banks will be adjusted for banks in the Shanghai
free trade zone, which was launched on Sunday.
Trade zone-related counters rose. Shanghai Waigaoqiao Free
Trade Zone Development jumped 5.5 percent in
Shanghai, while Shanghai International Port rose 1.4
percent and Shanghai Airport climbed 2.8 percent.
There were losses, however, for Hongyuan Securities
, whose Shenzhen shares tumbled 8.1 percent after the
official Shanghai Securities News reported that its general
manager and his deputy are being investigated by public security
Power Assets jumped 3 percent after announcing
plans to spin off its Hong Kong electricity business in a deal
that could be worth as much as $5 billion before the end of the
year, IFR reported on Friday.
Sino-Ocean Land sank 2.8 percent after saying it
will issue $808 million worth of new shares to two major
shareholders, raising capital for future development projects.