Hong Kong, China shares gain on encouraging China developments

Last Updated: Wed, Mar 06, 2013 09:30 hrs

* HSI +1 pct, H-shares +1.7 pct, CSI300 +1 pct

* China Telecom, Unicom up on reported 4G rollout in 2013

* Chinese banks up on news loan-to-deposit ratio under review

* Power Assets climb ahead of 2012 full-year earnings

By Clement Tan

HONG KONG, March 6 (Reuters) - Hong Kong and China shares posted solid gains on Wednesday, with the Chinese financial and telecom sectors strong as investors cheered comments made by policymakers at the country's annual parliamentary meetings.

ZTE surged on news reports that the world's fourth-biggest handset maker had entered a strategic collaboration with Intel for a new platform that could enhance performance of ZTE's next generation of smartphones.

The Hang Seng Index climbed 1 percent to 22,777.8, still some way off chart resistance at about 23,000, the top end of a narrow 500-point range the benchmark has traded in for more than two weeks.

The China Enterprises Index of the top Chinese listings in Hong Kong gained 1.7 percent. The CSI300 of the leading Shanghai and Shenzhen listings rose 1 percent, while the Shanghai Composite Index was up 0.9 percent. Shanghai volume was robust.

Onshore indexes have now erased more than 80 percent of sharp losses on Monday that were the CSI300's heaviest in more than two years. The losses stemmed from the introduction of more curbs on the mainland housing market.

"The National People's Congress will make for choppy markets in the next week or so, but the earnings season will provide opportunities to look for good individual companies with strong balance sheets," Catherine Yeung, an investment director with Fidelity Worldwide Investment, said at a media luncheon.

China Unicom climbed 1.7 percent and China Telecom 2 percent after the official China Securities Journal reported that the country may issue licenses for 4G network licenses this year, expanding on a trial conducted by China Mobile. The article cited Minister of Industry and Information Technology Miao Wei.

ZTE jumped 8.9 percent in Hong Kong, its biggest one-day gain since in more than four years, and the Shenzhen listing surged the maximum-allowed 10 percent.

The Chinese banking sector rose after state media reported that Shang Fulin, the China Banking Regulatory Commission chairman, said that his agency is researching the possibility of raising or replacing the loan-to-deposit ratio capped on the country's lenders, now at 75 percent.

Mid-sized lender China Minsheng Bank climbed 2.8 percent in Hong Kong, while gaining 3.4 percent in Shanghai. In Hong Kong, the "Big Four" Chinese banks each posted gains of more than 2 percent.

The Chinese property sector rebounded strongly after the country's top economic planning agency said guidelines for urbanisation will be launched by July. China plans to spend 40 trillion yuan ($6.4 trillion) to bring 400 million people to cities over the next decade.

Fresh curbs on the housing market announced late last Friday sent stocks reeling earlier this week. But on Wednesday, China Vanke jumped 2.4 percent in Shenzhen, while China Resources Land rose 1.9 percent.


Snack maker Want Want China Holdings underperformed, inching up 0.2 percent despite posting a 32 percent rise in 2012 net profit on Tuesday. The increase was largely in line with market expectation.

On Wednesday, its shares were hit by a UBS downgrade from "neutral" to "sell". The brokerage said the company's revenue guidance for 2013 appeared aggressive given that volume growth was only 7 percent in 2012 and management did not plan price increases for 2013.

Power Assets rose 1.1 percent ahead of its 2012 full-year corporate earnings. The stock, up 6.8 percent this year, is trading at a 17 percent premium to its historic median 12-month forward earnings multiple, according to Thomson Reuters StarMine.

In the last 30 days, two of 15 analysts have upgraded their 2012 full-year earnings-per-share estimates for Power Assets by an average of 2.6 percent, according to StarMine.

Tencent Holdings rose 1.2 percent, while Belle jumped 3.6 percent after the index manager announced they would become FTSE China 25 components, effective after markets close on March 15.

The two stocks will replace Yanzhou Coal and Zijin Mining in the benchmark. On Wednesday, Yanzhou Coal was up 0.4 percent and Zijin Mining down 2.3 percent.

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