Hong Kong, China shares rebound; AIA jumps after strong profit growth

Last Updated: Wed, Feb 27, 2013 04:40 hrs

* HSI +0.5 pct, H-shares +0.4 pct, CSI300 +0.8 pct

* PBOC cash injection eases China tightening worries

* AIA hits record high, 2012 net profit jumped 89 pct

* Chinese brokers rise after more regulator moves

By Clement Tan

HONG KONG, Feb 27 (Reuters) - China shares rebounded from multi-week lows on Wednesday, led by strength in the brokerage sector on signs of more financial innovation as the central bank eased tightening concerns after injecting funds into the money market.

The Hong Kong market bounced off a two-month low, with AIA Group among the leading boosts after it posted strong profit growth. An affirmation by the U.S. Federal Reserve of its stimulative monetary policies also provided some respite.

The Hang Seng Index went into the midday trading break up 0.5 percent at 22,624.1 after closing on Tuesday at its lowest since Dec. 21. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 0.4 percent.

In the mainland, the CSI300 of the top Shanghai and Shenzhen A-share listings rose 0.8 percent, while the Shanghai Composite Index gained 0.3 percent. Both had hit their lowest since January on Tuesday.

Early gains came as China's central bank looks set to resume injecting liquidity into the money market, traders said on Wednesday, a move that will relieve those who worried that recent moves to drain money signalled the beginning of a wider tightening cycle.

"I don't think there will be too much negative surprises from here, so this might be a good point to selectively buy on weakness into sectors with a good longer-term growth story," said Wang Aochao, UOB Kay Hian's Shanghai-based head of research.

The Chinese brokerage sector is one such example. On Wednesday, the sector rose after China's market regulator issued draft rules on Tuesday that would make it easier for brokerages to package, securitise and resell a wide range of assets from real estate to receivables to commercial paper.

Shares of Citic Securities and Haitong Securities , the country's two largest listed brokerages, each rose more than 2 percent in Shanghai. In Hong Kong, Citic rose 2.8 percent, but is still some 12 percent off a Jan. 30 high.

Chinese brokerages are likely to benefit from incremental moves Beijing is likely to make throughout the year to liberalise capital markets in the mainland, a focus likely to be reinforced at next week's annual parliamentary meetings.

The official China Securities Journal reported on Wednesday that the securities regulator repeated its pledge to encourage long-term investment in stocks, while supporting the expansion of domestic institutional investors.

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

"I don't think there will be too many negative surprises from this year's meeting because of this transition process," UOB-Kay Hian's Wang said.


AIA Group jumped 3.5 percent to a record high after Asia's third-largest insurer posted an 89 percent growth in 2012 net profit, while announcing plans to open a representative office in Myanmar.

AIA shares have bucked the downward trend in the broader Hong Kong market in February as investors opted for its perceived earnings safety. It is up 5.5 percent on the month, compared with the 4.6 percent loss for the Hang Seng Index.

Esprit Holdings, Hong Kong Exchange (HKEx) , New World Development and casino operator SJM Holdings are among a slew of companies due to also report corporate earnings later in the day.

Espirit rose 1.2 percent and HKEx rose 0.8 percent ahead of respective earnings reports.

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