* SSEC +0.5 pct, CSI300 +0.6 pct, HSI +0.7 pct
* Shenzhen-Hong Kong Connect boost Hong Kong small-caps
* China blue-chips benefit from rotation out of property,
SHANGHAI, Nov 28 (Reuters) - China's blue-chip CIS300 Index
rose early on Monday, set for a sixth day of gains,
with upbeat industrial profit data strengthening conviction the
Chinese economy has bottomed out and making risk assets such as
equities more attractive than bonds.
Hong Kong shares also strengthened, touching a two-week
high, as a pull-back in the surging U.S. dollar gave some relief
to Asian shares, which had underperformed on worries about
capital flight to high-yielding U.S. markets.
Sentiment in the Hong Kong market was aided by an
announcement on the weekend that the long-awaited Shenzhen-Hong
Kong Stock Connect would be launched on Dec. 5, raising hopes
that a fresh wave of Chinese money would soon head southward.
China's blue-chip CSI300 index rose 0.6 percent,
to 3,542.41 points by the lunch break, and looks set to score a
six-session winning streak. The Shanghai Composite Index
gained 0.5 percent, to 3,278.51 points.
Investors' risk appetite continued to rise after data showed
China's industrial profits in October rose 9.8 percent, aided by
the raw materials sector.
The Hang Seng index added 0.7 percent, to 22,886.21
points, the highest since Nov 10. The Hong Kong China
Enterprises Index gained 1.1 percent, to 9,895.94.
Small-caps, which will be included in the Shenzhen-Hong Kong
investment link, were the biggest gainers, with the Hang Seng
Composite SmallCap Index jumping 1.5 percent to a
But underscoring wide valuation gaps between Hong Kong and
Shenzhen markets, as well as the trend in fund flows, Shenzhen's
start-up board ChiNext, which is four times more
expensive than the HSSI, ended the morning roughly flat.
"The Connect will benefit Hong Kong stocks more, because
more money will flow southward due to yuan depreciation worries,
and the huge discount Hong Kong small-caps enjoy," said David
Dai, Shanghai-based investor director at Nanhai Fund Management
Dai said blue-chips rather than small-caps were underpinning
the recent rally in the China market, because modestly-priced
cyclical stocks were the biggest beneficiaries of an emerging
rotation of investor money out of property and bond markets.
"More and more investors believe the economy has bottomed
out and that the bond market bull run is coming to an end, which
is why blue-chips are becoming attractive and being re-priced."
All main sectors rose in China and Hong Kong.
Energy shares , however, underperformed
the broader market, after a sharp correction in global oil
prices amid worries that a production cut deal will not
be reached during a meeting of the Organization of Petroleum
Exporting Countries this week.
(Reporting by Samuel Shen and John Ruwitch; Editing by