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China shares set for solid July finish; property gets policy lift

Source : REUTERS
Last Updated: Wed, Jul 31, 2013 04:50 hrs

* HSI +0.2 pct, H-shares +0.5 pct, CSI300 +0.9 pct

* China set for July gain, HK in 1st monthly rise in three

* Fresh buying in Chinese property buoys sector outperformance

* Huaneng Power gains after strong H1 profit

By Clement Tan

HONG KONG, July 31 (Reuters) - Hong Kong and China shares are set to end July on a solid footing, lifted by the mainland's property sector as investors cheered comments from China's politburo that were seen affirming greater official tolerance for home price increases.

Bourse volumes fizzled out after an early spike, however, as investors marked time ahead of the outcome of the U.S. Federal Reserve policy meeting and the China official manufacturing PMI early on Thursday as well as U.S. jobs data on Friday.

The official Xinhua news agency reported late on Tuesday that China's politburo will "increase support for the real economy" and push "human-centred" urbanisation, while promoting the stable and healthy development of the real estate sector.

"The statement made by the politburo is quite favourable for the property sector. There is no mention of any need for adjustment, which is something they haven't done in a while," said Cao Xuefeng, a Chengdu-based head of research at Huaxi Securities.

At midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings was up 0.9 percent. The Shanghai Composite Index climbed 0.6 percent to creep above the 2,000-point level it has struggled around for about two weeks.

They are now up 0.4 percent and 1.1 percent on the month, respectively, after slumping in June as cash markets in the mainland tightened. On the year, they are still down 12.5 and 11.8 percent.

The Hang Seng Index rose 0.2 percent to 22,002.2 points after earlier hitting its highest intra-day level since June 5. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 0.5 percent.

They are set for their first monthly gain in three, now up 5.8 percent and 4.3 percent, respectively, in July. But for the year, they are still down 2.9 and 15 percent.

On Wednesday, shares of China Vanke, the country's largest developer by sales, jumped 4.3 percent in Shenzhen, while its rival Poly Real Estate spiked 4.5 percent in Shanghai.

In Hong Kong, China Resources Land soared 4.9 percent, reversing losses on the year as traders reported strong fresh buying the the Chinese property sector in Hong Kong.

A senior central bank official refuted any link between a property boom and easy credit on Wednesday. Sheng Songcheng, head of statistics with the People's Bank of China, said unbalanced supply and demand caused rising home prices in China.

Additionally, China's top economic planning agency said on Wednesday that Beijing would ensure ample liquidity in the financial system and pledged to unveil an urbanisation plan in the second half, while pushing ahead the with housing registration system and land reform.

EARNINGS STATE OF MIND

But with the interim earnings reporting season entering its peak in mid-August, profit advisories also dominated the market.

Shares of China Cosco dipped 2.4 percent in Hong Kong and 0.4 percent in Shanghai after the country's largest shipper said it expected its first-half loss to shrink by up to 85 percent from a year earlier.

China Cosco, along with several other Chinese industrial or material companies reeling from overcapacity-related issues, runs the risk of having its A-share listing delisted if it posts a third-straight year of losses.

China Life Insurance climbed more than 2 percent each in Hong Kong and Shanghai after the world's largest insurer by market capitalisation said it expects first half earnings to increase more than 50 percent from a year earlier.

Huaneng Power rose 1.8 percent in Hong Kong and 0.6 percent in Shanghai after reporting a 165 percent jump in interim net profit, earning more in the first half of 2013 than it did the whole of 2012.

Credit Suisse analysts upgraded their earnings-per-share forecast for Huaneng by 13 percent for the current financial year, saying declining coal prices are likely to provide a buffer for its margins, but that the size of tariff cuts will remain a focus.




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