* HSI +0.8 pct, H-shares +1.5 pct
* CSI300, Shanghai Comp both +0.4 pct
* Guoco Group surges on privatisation bid
* A-share vs H-share divergence broadens
* C.Suisse bullish on Macau casino stocks
By Vikram Subhedar
HONG KONG, Dec 12 (Reuters) - Hong Kong shares rose to a
16-month closing high on Wednesday, widening their
outperformance over wobbly mainland peers as stepped-up merger
activity and a strong showing overnight on Wall Street
encouraged investors to extend a recent rally.
The Hang Seng Index ended the day up 0.8 percent at
22,503.4. The China Enteprises index rose 1.5 percent,
outpacing gains by other Asian benchmarks.
In China, the CSI300 of top Shanghai and Shenzhen
listings and the Shanghai Composite recovered from
earlier losses to close up 0.4 percent.
A rebound in financial stocks as well as a 4.7 percent jump
in premium liquor producer Kweichow Moutai helped
mainland markets close higher on the day.
ICBC, up 1.3 percent, was the biggest boost on
China's domestic indexes have bady underperformed Hong
Kong's, with the Hang Seng up 22 percent this year compared with
a 5.3 percent decline for the Shanghai Composite and an 3.3
percent decline for the CSI300.
Auto company SAIC, down 0.7 percent, and refiner
Sinopec, down 0.2 percent, were the biggest drags on
While mainland markets remained sluggish, many Hong Kong
shares moved up, underpinned by foreign investors' optimism on
China. Making healthy gains on Wednesday were growth-sensitive
sectors, property companies and Macau casino stocks.
Guoco Group, a holding company which has
investments in financial services, property and leisure
businesses, saw shares surge 30.6 percent after its major
shareholder offered to take the company private.
"Privatisation is one theme worth keeping an eye on," said a
Hong Kong-based fund manager, adding that cash-rich majority
shareholders will seriously consider taking advantage of low
valuations and cheap money to take listed companies private.
"Liquidity is driving Hong Kong at the moment, so this rally
can continue even if Shanghai does not move much," said the
manager, adding that domestic investors in China seemed more
pessimistic than their offshore peers.
Hong Kong asset prices are key beneficiaries of monetary
easing by global central banks to try to aid their economies.
With the flood of money coinciding with a steady improvement
in Chinese economic data, offshore investors for whom Hong Kong
remains the most popular gateway into China have aggressively
returned to rebuild positions.
The International Monetary Foundation sounded a note of
caution, however, warning that Hong Kong property prices could
drop abruptly, leading to wider economic consequences.
Sands China rose 2.9 percent while Galaxy
Entertainment jumped 3 percent after brokerage Credit
Suisse named the two as among its favoured Macau picks.
Credit Suisse expects Macau gambling revenue in December to
grow as much as 31 percent from a year earlier.
Casino stocks are among the top performers in Hong Kong in
this year as investors have rewarded brisk earnings growth.
Sands China shares are up 52 percent year-to-date and are poised
for a third straight year of gains.
Shares of consumer staples companies and Hong Kong
utilities, which have seen heavy interest this year as they
offered relative safety, were weaker as investors switched to
more risky sectors.
Tingyi Holdings, which makes noodles and
beverages, fell 1.1 percent, bringing its losses this quarter to
6.6 percent. Personal hygiene products maker Hengan
International shed 0.9 percent.
Hong Kong and China Gas fell 1.6 percent and was
the top loser among Hang Seng components.