(Updates to midday)
* HSI down 0.3 pct, CSI300 flat
* Indices set for monthly losses
* Citic Pacific dives, plagued by iron ore weakness
* China insurers lifted by policy to boost medical coverage
By Clement Tan and Vikram Subhedar
HONG KONG, Aug 31 (Reuters) - Hong Kong shares slipped,
while China hovered near levels not seen since early 2009 on
Friday, with both markets set to end August in the red after
first half corporate earnings disappointed with little prospect
of imminent recovery.
Turnover was sluggish ahead of an annual meeting of central
bankers in Wyoming later, with the market now expecting Federal
Reserve chairman Ben Bernanke to keep easing expectations intact
going into September, but short of delivering fresh measures.
Investors have in August rolled into stocks of companies
that were able to project resilient earnings growth in a
sluggish economic environment, with little prospect of next
month's economic data for China showing improvement.
The CSI300 Index of the top Shanghai and Shenzhen
listings was flat at midday, remaining at its lowest since March
2009 and poised for a third-straight monthly loss. It is down
5.2 percent on the month, compared to a 2.5 percent loss for the
Shanghai Composite Index.
The Hang Seng Index closed down 0.3 percent at
19,492.2, holding above the 38.2 percent Fibonacci retracement
of its rise from June lows to August highs at about 19,443. The
benchmark is down 1.5 percent in August, set for its first
monthly loss in three.
"People have been generally defensive in August, with
earnings visibility over-ridding other considerations, such as
low valuations," said Alan Lam, Julius Baer's Greater China
"September will be very busy policy-wise, so there might be
a switch into cyclical names. There are meetings in Europe and
the U.S., but I don't expect China to do too much ahead of their
18th National Congress meeting likely in October," Lam added. He
was referring to a meeting, likely in October, that will mark
the start of a once-in-a decade political leadership transition.
Beijing is expected to post China's official manufacturing
managers' index reading on Saturday, which is likely to ease to
a 9-month low of 50 in August after a preliminary survey last
week showed China's factories contracting in August by the most
in nine months.
Citic Pacific, one of China's leading iron ore
miners, tanked 5.5 percent to its lowest since April 2009,
plagued by iron ore prices that lingered near three-year lows.
On Friday, Chinese insurers were outperformers in the
mainland. The country's top two players in the sector were the
top boosts on A-share market indices. China Life Insurance
rose 2.7 percent, while Ping An gained
The rises were linked to a statement by China's State
Council, or cabinet, that the government will shoulder at least
50 percent of the cost of treating critical illnesses and allow
local governments to tap on existing funds to purchase
commercial insurance for serious illness.
Morgan Stanley analysts said this will not only improve the
quality of medical care, but also boost the demand for related
ESPRIT, LI& FUNG AT AUGUST EXTREMES
Within the Hang Seng Index, August's top performing stocks
are skewed towards those that rely on relative safety offered by
the Chinese consumer as investors pulled money out of cyclical
sectors most linked to a slowing economy at home and abroad.
Top performing stock Esprit Holdings is up 28.5
percent this month as it rebounded from a year-low of HK$8.83
marked on July 25. Macau casino company and the latest entrant
into the Hong Kong benchmark Sands China is the
second-best performer and is up nearly 20 percent.
At the other end of the spectrum, shares of Li & Fung
, exporter for top U.S. retailers such as Wal-Mart
, are down 18 percent and poised for the worst monthly
performance since the peak of the financial crisis in October
Suffering from limp demand from its core markets in the
U.S., Europe and China, the company reported on Aug. 9 a sharp
drop in profits as well as shrinking margins sending investors
scurrying for the exits and wiping out about a fifth of the
company's value in a day.
(Editing by Ron Popeski)