Hong Kong, China shares slip, profit warnings crimp policy optimism

Last Updated: Mon, Oct 15, 2012 08:00 hrs

(Updates to midday)

* HSI -0.1 pct, CSI300 -0.6 pct, Shanghai -0.5 pct

* ZTE, Angang Steel hit by profit warnings

* China data mixed, Q3 GDP on Thursday eyed

* Belle at 5-week low after disappointing sales

By Clement Tan

HONG KONG, Oct 15 (Reuters) - Hong Kong shares slipped from their highest close in more than five months on Monday, as profit warnings from Chinese firms helped stall a six-week rally driven by market-boosting steps from Beijing.

China's second-largest telecom equipment maker ZTE Corp and Angang Steel both warned on earnings, while macro-economic data has painted a mixed picture with bank lending in September coming in weaker than expected although export growth beat forecasts.

"The profit warnings are a sign that China still needs to do more to support growth, but I think most people are expecting more fiscal than monetary measures," said Jackson Wong, Tanrich Securities' vice-president for equity sales.

Recent moves by Beijing have included the acceleration of infrastructure spending and government funds lifting stakes in major Chinese banks.

The Hang Seng Index slipped 0.1 percent to 21,110.1, slipping from its highest close since May 3 recorded last Friday.

The CSI300 Index of the top Shanghai and Shenzhen listings was down 0.6 percent at the midday trading break, while the Shanghai Composite Index lost 0.5 percent.

"The main focus this week is China's Q3 GDP figure on Thursday. I don't think sentiment will change too much as long as it's in line with expectations," Wong said

Beijing will announce the official third-quarter growth figure later this week, expected at 7.4 percent -- which would miss the official annual mandate of 7.5 percent for 2012, for the first time since the first quarter of 2009.

ZTE slumped 15.2 percent in Hong Kong and the maximum 10 percent in Shenzhen, both in heavy volume, after flagging a loss of as much as $279.2 million for the first nine months of the year.

Angang Steel lost 2.7 percent in Hong Kong and 0.9 percent in Shenzhen after the company warned late on Friday that it could make a loss of $505 million for the first nine months this year.

Belle International, China's leading foot- and sportswear retailer, slid 3.7 percent after announcing underwhelming same store sales growth in the third quarter.

Belle is now up 0.3 percent for the year, compared to the 14.5 percent gain for the Hang Seng Index. It is currently trading at 17.7 times forward 12-month earnings, a 20 percent discount to its historical median, according to Thomson Reuters StarMine.

But in a note to clients dated Oct. 12, UBS analysts maintained their "sell" rating on Belle's stock, saying same store sales could turn negative in the coming quarters.

(Additional reporting by Vikram Subhedar; Editing by Edwina Gibbs)

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