March 5, 2013 / 9:06 AM / 5 years ago

China shares claw back some ground, power producers help Hong Kong inch up

* HSI +0.1 pct, H-shares +0.6 pct, CSI300 +3 pct

* Mid-sized Chinese lenders spike as money costs dip

* Chinese property sector stays on defensive

* Want Want stretches gains after 2012 earnings surprise

By Clement Tan

HONG KONG, March 5 (Reuters) - China shares rebounded on Tuesday from the previous session’s two-month closing low, powered by strong gains for mid-sized lenders as jitters over monetary policy tightening ebbed following a sharp dip in money market rates.

Hong Kong markets eked out a first gain in three days as turnover dipped 10 percent from the day before, with Chinese power producers strong after a work plan released by the country’s top economic planning agency to conserve energy raised hopes of higher tariffs.

The Hang Seng Index inched up 0.1 percent to 22,560.5, while the China Enterprises Index of the top Chinese listings in Hong Kong climbed 0.6 percent. Both are still negative on the year, down 0.4 and 2.3 percent, respectively.

In the mainland, the CSI300 index of leading Shanghai and Shenzhen A-share listings jumped 3 percent after recording its heaviest one-day loss in more than two years on Monday.

The Shanghai Composite Index climbed 2.3 percent from a two-month closing low as bourse volume dipped almost 20 percent from Monday, but managed to stay above its average in the last 20 sessions.

“The magnitude of Monday’s slump took many by surprise. There could be more volatility as investors get used to a more neutral monetary policy position and as more policy details emerge from ongoing meetings,” said Cao Xuefeng, Huaxi Securities’ head of research in Chengdu.

Chinese power producers were bolstered by policy buzz as the parliamentary meetings got under way after the country’s top economic planning agency announced plans to accelerate market reforms in its drive to conserve energy and fight pollution.

Shares of Chinese power producers surged on hopes of higher tariffs, while putting coal producers under pressure. In Hong Kong, China Resources Power jumped 5.4 percent, while China Coal Energy slid 1.5 percent.

Chinese property counters stayed on the defensive after outgoing Premier Wen Jiabao reiterated Beijing’s commitment to curbing speculative demand in the housing market at the National People’s Congress.

The sector had slumped on Monday after China’s cabinet announced a new round of tightening measures on the housing market late on Friday.

China Resources Land (CR Land) followed Monday’s nearly 9 percent loss with another 1.9 percent slide. CR Land ended on Tuesday at its lowest close since mid-December after having tumbled 16.5 percent from a Jan. 30 peak.

Shanghai-listed Poly Real Estate shed 1.1 percent after earlier plumbing its lowest intra-day level since November. Shares of China’s second-largest developer by sales are now down 17 percent this year, compared with the 4 percent gain on the CSI300.

“We are at the start of a tightening cycle which will make it hard for the property sector to outperform,” Matthew Sutherland, Fidelity Worldwide Investment’s senior investor director for equities, said in a note after markets closed on Monday.

“Where we have holdings in the sector, these tend to be focused on quality defensive names and stocks with higher exposure to lower tier cities, where the impact may be more muted,” he added.


Chinese banks led benchmark indexes higher in onshore markets after China’s benchmark seven-day repo rate dipped 110 basis points early on Tuesday, pointing to an improvement in money supply conditions in the mainland.

This comes as Premier Wen announced China’s 2013 economic growth target at 7.5 percent, a level similar to 2012, and consumer inflation at 3.5 percent, compared with 2012’s 4 percent.

Mid-sized lender Ping An Bank surged the maximum 10 percent to a record high in Shenzhen. China Minsheng Bank jumped 7.5 percent in Shanghai and 3.3 percent in Hong Kong.

Chongqing Brewery jumped by the maximum 10 percent in Shanghai after Carlsberg launched a partial take-over bid worth 2.65 billion Danish crowns ($461.49 million) for 30.31 percent of its shares.

Want Want China climbed 3.6 percent, extending gains after the country’s top food and beverage maker by market value posted at the midday trading break a 32 percent rise in 2012 net profit, trumping market expectations.

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