Hong Kong shares climb to near 17-mth high, China slips

Last Updated: Thu, Dec 27, 2012 04:50 hrs

* HSI +0.4 pct, H-shares +0.9 pct, CSI300 -0.1 pct

* China banks lead HK rise, resurgent A-shares chased

* China Rongsheng hammered after warning of loss

By Clement Tan

HONG KONG, Dec 27 (Reuters) - Hong Kong shares climbed to a near 17-month high in holiday-thinned Thursday trade, catching up on strong gains in mainland markets during the 2-1/2 day break taken for Christmas.

But onshore China markets slipped from their highest levels since July as investors took profits on stocks in the financial and resource-related sectors.

The Hang Seng Index went into the midday trading break up 0.4 percent at 22,636.9, hovering around its highest since Aug. 1, 2011. Stiff chart resistance is next seen at around 22,800, peaks seen in July and August 2011.

The China Enterprises Index of the top Chinese listings in Hong Kong rose 0.9 percent. The Shanghai Composite Index and CSI300 of the top Shanghai and Shenzhen listings each slipped 0.1 percent.

Gains exceeding 3 percent in the first three days of the week lifted both onshore China indexes to their most overbought levels in more than two years.

"There's an element of catching up in today's trading," said Larry Jiang, chief investment strategist at Guotai Junan International Securities.

"The strong A-share performance over the last few days is definitely a factor and will continue to support gains in Hong Kong as more details of reform and signs of earnings and economic recovery emerge," Jiang added.

On Thursday, data showed the annual growth of China's industrial profits quickened to 22.8 percent in November from October's 20.5 percent, reinforcing signs of a steady economic recovery thanks to pro-growth policies.

In Hong Kong, shares of Bank of China rose 1.2 percent, with smaller banking sector rivals such as China Minsheng Bank seeing bigger percentage gains, rising 3.4 percent.

On Thursday, however, these smaller banking counters suffered bigger losses. In Shanghai, Minsheng Bank shed 1.7 percent, while Bank of China slipped 0.4 percent.

The same trend emerged in the resurgent A-share market in the previous two days and extended beyond the banking sector.

Anhui Conch Cement rose 1.1 percent in Hong Kong but tumbled 2.7 percent in Shanghai after gaining nearly 3 percent during the first three days of this week.


China Rongsheng Heavy Industries Group tumbled 7.4 percent after it warned of an annual net loss for 2012 on sharp declines in orders and prices of new vessels due to the shipping industry's downward turn.

Losses so far on Thursday took shares of the mainland's largest shipbuilder to their lowest in almost three weeks. The stock is now down 41.6 percent this year, compared to the 22.8 percent gain on the Hang Seng Index.

Chinese property counters were weaker in both markets. Poly Real Estate slipped 0.7 percent from Wednesday's three-year closing high in Shanghai, while China Overseas Land shed 0.7 percent in Hong Kong.

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