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China shares hit 4-mth high, Hong Kong off 16-mth peak on profit taking

Source : REUTERS
Last Updated: Mon, Dec 17, 2012 09:00 hrs

* HSI -0.4 pct, H-shares -0.1 pct, CSI300 +0.5 pct

* Coal producers lifted by China Coal's positive Nov sales

* China property shares sink, Beijing says to maintain property curbs

* AIA trading suspended after AIG launches $6.5 bln stake sale

By Vikram Subhedar and Clement Tan

HONG KONG, Dec 17 (Reuters) - China shares closed at their highest in more than four months on Monday as investors, encouraged by more signs of reforms to come, added to a surge last week that put onshore markets on course for their first annual gain since 2009.

After an annual policy-setting conference presided over by new Communist Party Chief Xi Jinping on Sunday, the official Xinhua news agency reported that China will maintain steady economic polices in 2013, leaving room for manoeuvre in the face of global risks while deepening reforms to support long-term growth.

That helped boost sentiment to extend last week's rally. The Shanghai Composite Index and CSI300 of the top Shanghai and Shenzhen listings each closed up 0.5 percent at their highest since Aug. 10.

In Hong Kong, the Hang Seng Index slipped 0.4 percent from a 16-month high, and the China Enterprises Index of the top Chinese listings in Hong Kong edged down 0.1 percent as investors took profit on the year's outperformers.

Steps by Chinese authorities to boost confidence in onshore markets along with hopes that China's new leaders will succeed in stabilizing growth and push through reforms have triggered a rebound off the multi-year lows hit earlier this month.

"Overall, the resolution of the leadership contest is positive for the Chinese market," said Martha Wang, portfolio manager of Fidelity's China Focus Fund, in an emailed statement.

"There are many companies with strong fundamentals, which have been indiscriminately punished by political uncertainty, trading at attractive valuations," Wang added, without giving further details.

The CSI300, comprising China's large-cap stocks, has rebounded 12 percent since its Dec. 3 closing low and is now up 0.9 percent on the year. The Shanghai Composite Index is still down 1.8 percent in 2012.

In another move over the weekend designed to further boost the A-share market, China's foreign exchange regulator removed the $1 billion limit for foreign sovereign wealth funds, central banks and monetary authorities buying Chinese assets through the Qualified Institutional Investor Programme (QFII).

The official China Securities Journal reported on Monday that the country's securities regulator is discussing measures to reduce the requirements needed for mainland Chinese firms to list in Hong Kong, in part to relieve the pent-up demand for domestic listings.

On Monday, growth-sensitive energy-related plays on the mainland were at the forefront of gains, with coal producers featuring strongly after China Coal Energy Co Ltd posted a 39 percent rise in coal sales volume in November from a year earlier.

Shares of China Coal, the country's second-largest coal producer, rose 2.2 percent in Shanghai and 0.1 percent in Hong Kong. Its smaller rival, Yangquan Coal jumped 6.8 percent in Shanghai.

Chinese oil giants were strong in onshore markets, but weaker in offshore markets, narrowing the outperformance of its H-shares on the year.

China Petroleum & Chemical Corp (Sinopec) shed 1.8 percent in Hong Kong, where its shares are up 4.7 percent for the year, but rose 1.2 percent in Shanghai, where its shares are still down 7.8 percent for the year.

PROFIT TAKING HITS HONG KONG

Losses in Hong Kong were further aggravated by weakness in large-cap stocks, which have been key beneficiaries of fund inflows into the territory's stock markets over the past few months.

HSBC shares, which hit their highest level since June 2011 last Friday, fell 0.7 percent, and Chinese internet giant Tencent Holdings, which set a record high last month, was off 0.9 percent.

Chinese property shares, most of which have outperformed the broader Hong Kong and onshore China market, fell after the same Xinhua report said Beijing would maintain controls on the sector in the new year.

China Overseas Land shed 1.3 percent in Hong Kong, cutting its 2012 gains to 81 percent. Poly Real Estate lost 2.5 percent in Shanghai, shaving its 2012 gains to 51 percent.

Shares of AIA Group were suspended from trading after American International Group launched a $6.5 billion offering of its remaining stake in the Asian insurer.



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