(Updates to midday)
* HSI down 0.3 pct, CSI300 down 1.6 pct
* Small- and mid-sized caps extend bleed on stringent
* Mainland investors moving into large caps: traders
* Chalco up after Winsway acquisition
By Clement Tan
HONG KONG, April 24 (Reuters) - China shares slumped on
Tuesday, hit by weakness in small- and mid-sized caps for a
second-straight day on fears that fresh guidelines could
trigger a spate of delistings in the cash-strapped sector,
dragging Hong Kong markets into the red.
The official Shanghai Securities News reported on Tuesday
that regulators are mulling a removal of government subsidies in
the calculation of company profitability, a move exacerbating
fears that more counters could be forced to delist.
The Shanghai Composite Index shed 1.4 percent at
midday, while the CSI300 Index slid 1.6 percent. Hong
Kong's Hang Seng Index closed down 0.3 percent.
"This move is a plus for the mainland markets in the long
run, but in the short run, could trigger a flight of funds from
the small- and medium-cap names to the relative safety of large
cap names," said Cao Xuefeng, head of research at Huaxi
Securities in Chengdu.
The CSI500 Index, a gauge of small- and medium-cap
listings in both Shanghai and Shenzhen, was a notable
underperformer, down 3.3 percent. The Shenzhen Composite Index
, where the bulk of the sector is listed, slid 3.1
Traders said the Shanghai bourse accounted for about 60
percent of overall volume in mainland Chinese markets, up from
55 percent in recent trading days and the typical 50-50 split
with Shenzhen. Midday A-share turnover in Shanghai was the
highest since March 29, 2011.
According to Thomson Reuters I/B/E/S, A-shares listed on the
Shanghai bourse are currently trading at 9.1 times forward
12-month earnings, compared to Shenzhen's 14.8 times, suggesting
the rollover play could go on for some time.
WEAK, BUT POCKETS OF STRENGTH SEEN
China Life Insurance , the mainland's
largest insurer, gained 0.7 percent in Shanghai and was flat in
Hong Kong, making the company a relative outperformer.
Another report in Shanghai Securities News suggested
Shanghai city authorities could launch a tax-deferrable pension
pilot programme that could generate up to 10 billion yuan ($1.6
billion) in additional insurance premiums annually.
Mid-sized Chinese banks also held onto gains at midday after
Bank of Beijing posted forecast-beating quarterly
earnings after markets closed on Monday. Bank of Beijing jumped
2.8 percent in midday volume that more than triple its 30-day
Aluminum Corp of China Ltd gained 1.3 percent
after the company said it has agreed to buy 29.9 percent of
imported coking coal supplier Winsway Coking Coal Holdings Ltd
for HK$2.39 billion ($307.92 million) to strengthen
its downstream logistics operations.
(Additional reporting by Vikram Subhedar; Editing by Richard