Hong Kong, China shares cut monthly losses with strong late Feb finish

Last Updated: Thu, Feb 28, 2013 09:40 hrs

* HSI jumps 2 pct on Thursday, but falls 3 pct in February

* CSI300 up 3 pct on the day, but slips 0.5 pct this month

* HK indexes have worst month since May, underperform China

* China Vanke surges after 2012 earnings impress

* SJM sinks after earnings miss, BofA-ML downgrade

By Clement Tan

HONG KONG, Feb 28 (Reuters) - Hong Kong shares ended February on a brighter note on Thursday, with growth-sensitive counters among the leading gainers after U.S. Federal Reserve Chairman Ben Bernanke reaffirmed his commitment to strong stimulus.

Mainland Chinese markets had their best day in a month ahead of the release of an official survey of manufacturing activity in the world's second-largest economy on Friday, with property developer China Vanke lifted by strong 2012 earnings.

The Hang Seng Index climbed 2 percent to 23,020.3 points, cutting its February losses to 3 percent. The China Enterprises Index of the top Chinese listings in Hong Kong rose 2.6 percent, but sank 5.7 percent this month.

Thursday's gains were both indexes' best daily performance since Jan. 2 and came in the highest turnover in three weeks, while losses in February were its worst monthly retreat since May 2012.

The CSI300 of the top Shanghai and Shenzhen A-share listings jumped 3 percent on Thursday, cutting February losses to 0.5 percent. The Shanghai Composite Index rose 2.3 percent on the day, but shed 0.8 percent this month.

Thursday's gains were both mainland indexes' best since Jan. 28 as Shanghai volume exceeded its 20-day moving average for only the second time since Feb. 5. Losses in February were their respective first monthly loss in three months.

"We have had quite a bad month, but this is after the strong rally we had in the two months before," said Larry Jiang, chief investment strategist at Guotai Junan International Securities.

"I don't think we need to get overly anxious at this point. There's still a lot of money in the market even though inflows have slowed. Everybody's waiting to see what's coming out of the meetings next week," Jiang added.

The annual Chinese People's Political Consultative Conference and National People's Congress, where Xi Jinping is expected to be confirmed as president, start in Beijing on March 3 and 5, respectively.

On Thursday, shares of China Vanke surged 6 percent after its second-half net income beat expectations. Its strong corporate earnings lifted sector peers, with Poly Real Estate jumping 3.6 percent in Shanghai.

In Hong Kong, China Resources Land jumped 3.7 percent, while China Overseas Land rose 3.3 percent to almost claw back losses on the month.

China's property market has been rife with speculation about rising house prices and what the new government may do to curb them once it takes office next week, testing investors' nerves.

Other growth-sensitive sectors were also stronger after Fed President Bernanke, facing a congressional panel for a second day, downplayed signs of internal divisions, saying the policy of quantitative easing has the support of a "significant majority" of top central bank officials.

China coal counters were among the top percentage risers in Hong Kong. China Coal Energy Ltd jumped 5.1 percent, while China Shenhua Energy spiked 3.7 percent.

In Hong Kong, Greentown China gained 0.5 percent, while Chinese insurers PICC Group and New China Life Insurance each jumped 4 percent. All three are new MSCI China index components from March 1.


In a report on Thursday, Goldman Sachs strategists said earnings growth troughed in the third quarter in 2012. They expect sentiment to turn positive in the near term and raised their MSCI China earnings-per-share growth forecast from 0 to 1 percent for 2012 and 9 to 13 percent for 2013.

Macau casino operator SJM holdings dove 3.8 percent to HK$19.38 after posting a weaker-than-expected 2012 net profit increase that triggered brokerage downgrades, including one from Bank of America-Merrill Lynch.

BofA-ML downgraded its outlook on the stock from "neutral" to "underperform" while cutting its target price from HK$22 to HK$21.10, seeing limited upside with SJM's stock price still up almost 8 percent in the year to date, compared to the Hang Seng Index's 1.6 percent rise.

Hong Kong property developer Sun Hung Kai Properties climbed 0.8 percent ahead of its first-half corporate earnings. Up 3.3 percent on the year, it is trading at a 16 percent discount to its historical 12-month forward earnings multiple, according to Thomson Reuters StarMine.

After markets closed, the world's second-largest property company by market value posted an underlying profit of HK$11.5 billion ($1.5 billion) for the fiscal first half, beating analysts' estimates.

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