Hong Kong, China shares end strong January on a whimper

Last Updated: Thu, Jan 31, 2013 11:01 hrs

* HSI down 0.4 pct on the day, but up 4.7 pct on the month

* CSI300 down 0.1 pct on Thursday, but up 6.5 pct in January

* HSI scores 5th monthly gain, longest winning streak since 2007

* China steel, shipping sectors hit by profit warnings

* Positive profit alerts lift Chinese power producers

By Clement Tan

HONG KONG, Jan 31 (Reuters) - Hong Kong shares slipped from a 21-month high on Thursday, trimming monthly gains, as investors turned cautious following a batch of profit warnings and knocked the Hang Seng Index off its most overbought levels in almost a month.

The Hang Seng Index shed 0.4 percent from Wednesday's 21-month closing high to end at 23,729.5 points, leaving the benchmark with a gain of 4.7 percent for the month of January.

The HSI has now risen for five straight months, equaling a winning streak between March and July in 2009 and the longest since an eight-month string between March and October 2007.

Onshore Chinese benchmark indexes had a tepid January finish, as investors rotated into shares of power producers and out of the property sector ahead of the release of China's January official purchasing managers' index on Friday.

The CSI300 of the top Shanghai and Shenzhen A-share listings slipped 0.1 percent on the day, but jumped 6.5 percent on the month. The Shanghai Composite Index ended up 0.1 percent on Thursday and 5.1 percent in January.

The China Enterprises Index of the top Chinese stocks in Hong Kong slid 0.3 percent on the day, but climbed 6.1 percent this month. Losses in Hong Kong came in the third-worst turnover this month. Shanghai volumes stayed fairly robust.

"We went a little overbought in Hong Kong yesterday, so we are correcting from that," said Alex Wong, director of asset management at Ample Finance. "At this point, investors are opting for earnings safety, so it's not helping shipping and steel names."

Chinese steel and shipping firms dominated the more than 10 profit warnings posted by Hong Kong-listed companies overnight, while Chinese power producers were lifted by another positive profit alert for the sector.

Aggravating jitters about the steel sector, the China Iron and Steel Association (CISA) said on Thursday that 2012 profits reported by its members, which include more than 70 large steel mills, slumped 98 percent to 1.6 billion yuan ($257.2 million).

Angang Steel dived 5 percent in Hong Kong and 2.7 percent in Shenzhen to their lowest in a month after it estimated net 2012 losses at 4.2 billion yuan and warned its A-shares could be delisted following two straight annual losses.

China Shipping Development Co Ltd tumbled 4 percent in Hong Kong after it warned of a sharp fall in 2012 net profit. Its larger bulk shipping rival China Cosco warned of a net loss late last Friday.

CNOOC Ltd slid 2.3 percent after the Chinese oil giant said it plans to boost spending to produce up to 2 percent more in 2013, below a five-year average growth target, highlighting the need for the state giant to make acquisitions.

Chinese property developers slid after local media reported that the Beijing city government had submitted a property tax plan to the State Council for approval.

China Vanke tumbled 5.2 percent in Shenzhen, while Poly Real Estate slumped 6.2 percent in Shanghai on fears that the imposition of property taxes in Beijing, one of China's largest cities, will hurt demand.

Rising home prices have elevated fears of more government curbs on the sector, but Chinese property shares jumped on Wednesday as investors welcomed a domestic news report that the central government could tolerate an increase of up to 10 percent in home prices.


In a sign that investors are positioning themselves in sectors that will likely not disappoint in the upcoming earnings season, Datang International Power spiked 6.9 percent in Hong Kong and 3.4 percent in Shanghai after saying it expects 2012 net profit to more than double from the previous year.

Even excluding a one-off gain related to disposal of its Shanxi power plant, Deutsche Bank analysts see Datang's net profit largely in-line with consensus, while top-ranked Thomson Reuters StarMine analysts were below consensus going into Wednesday's profit announcement.

Further gains for Datang and other Chinese power producers could be driven by analysts' upgrades in the near term.

Chinese media reported that the State Council has approved an energy consumption target that aims to keep energy consumption below 4 billion metric tonnes of standard coal equivalent by 2015, with electricity consumption below 6.15 trillion kwh.

Shares of China Unicom were also stronger, gaining 1.6 percent after the company said it expects 2012 net profit to rise more than 50 percent from a year earlier.

Thursday's tepid end marked a second-straight monthly gain for onshore Chinese stock markets that have bounced more than 20 percent from a Dec. 3 nadir.

Mainland Chinese fund managers boosted their recommended equity weightings in January to a 27-month high on optimism over the economic outlook and prospects of continued capital inflows, the latest Reuters fund poll showed.

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