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Hong Kong, China shares poised for 2nd straight gain; ZTE surges

Source : REUTERS
Last Updated: Wed, Mar 06, 2013 05:00 hrs

* HSI +0.9 pct, H-shares +1.6 pct, CSI300 +0.5 pct

* China Telecom, Unicom lifted by reported 4G rollout in 2013

* Chinese banks up, CBRC says 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 are set to rise for a second straight day on Wednesday, as Wall Street's record close accentuated gains in some sectors after a series of policy announcements from the country's ongoing annual parliamentary meetings.

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

The CSI300 index of the leading Shanghai and Shenzhen A-share listings went into the midday trading break up 0.5 percent, further clawing back steep losses on Monday. The Shanghai Composite Index rose 0.4 percent.

The Hang Seng Index was up 0.9 percent at 22,756.1. It is still some way off chart resistance at about 23,000, the top end of a narrow 500-point range the benchmark has traded for more than two weeks.

The China Enterprises Index of the top Chinese listings in Hong Kong climbed 1.6 percent. Gains came in heavy volumes in both on- and offshore Chinese markets, continuing a recovery after the CSI300 posted its worst loss in more than two years on Monday.

"Part of today's risk-on mode has to do with overnight U.S. gains, but there are also several sector moves driven by news flow coming out of the ongoing National People's Congress, which could keep markets choppy ahead," said Larry Jiang, chief strategist at Guotai Junan International Securities.

ZTE and China's two smaller telcos were also lifted by a report in the official China Securities Journal that cited Miao Wei, minister of Industry and Information Technology, as saying Beijing could issue 4G network licences this year.

In Hong Kong, China Unicom climbed 3.7 percent, while China Telecom rose 2.5 percent. ZTE jumped 8.3 percent in potentially its best daily showing since September 2011 in Hong Kong, while soaring by the maximum 10 percent in Shenzhen.

The Chinese banking sector was lifted by comments from Shang Fulin, the China Banking Regulatory Commission chairman, 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.

The official China Securities Journal also reported Shang as saying wealth management products, along with trust and investment products originating from banks, do not constitute shadow banking.

Mid-sized lender China Minsheng Bank climbed 2.6 percent in Hong Kong, while jumping 3.3 percent in Shanghai.

DOWNGRADE HURTS WANT WANT

Snack maker Want Want China Holdings bucked broader market gains, shedding 2.6 percent after UBS analysts downgraded the stock from "neutral" to "sell" and cut their price target by about 6 percent despite the company posting a 32 percent rise in 2012 net profit on Tuesday that was largely in line with market expectation.

In a note dated March 6, UBS said the 20 to 25 percent 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 later in the day. Up 6.9 percent this year, it is trading at a 17 percent premium over its historic median 12-month forward earnings multiple, according to Thomson Reuters StarMine.

In the last 30 days, 2 of 15 anaysts 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 1.7 percent, while Belle jumped 3 percent after index manager announced them as new FTSE China 25 components, replacing Yanzhou Coal and Zijin Mining, which are up 0.9 and down 1.5 percent respectively.



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