Hong Kong shares climb to 6-week high, China weak ahead of holiday

Last Updated: Fri, Apr 26, 2013 05:10 hrs

* HSI +0.9 pct, H-shares +1.1 pct, CSI300 -0.2 pct

* HSI, H-shares due for second-best weekly showing this year

* China Life Insurance tests April 11 high after Q1 earnings

* China Southern headed for worst loss in three weeks

By Clement Tan and Yimou Lee

HONG KONG, April 26 (Reuters) - Hong Kong shares rose to their highest since mid-March on Friday, stretching gains for the week, as a recovery in physical commodity prices helped magnify earnings-driven strength in Chinese financial and energy majors.

Mainland China markets ended a choppy morning session slightly lower as bourse volumes stayed anemic, heading for a fourth weekly loss in five ahead of an extended Labour Day holiday. China stock markets will be closed April 29 through May 1.

At midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings slipped 0.2 percent, while the Shanghai Composite Index shed 0.5 percent. On the week, they are down 2.8 and 2.5 percent, respectively.

The Hang Seng Index was up 0.9 percent at 22,599 points, its highest since March 15. It is now up 2.7 percent on the week and has now spiked 5 percent in six sessions from a five-month low on April 18.

The China Enterprises Index of the top Chinese listings in Hong Kong rose 1.1 percent on the day and has now gained 2.9 percent on the week. Both Hong Kong indexes are set for their second-best weekly showing this year.

"Some individual companies are starting to show they are not doing too badly, so this might be a good time for value investors to start accumulating some positions," said Larry Jiang, chief strategist at Guotai Junan International Securities.

On Friday, China Life Insurance rose 2.9 percent in Hong Kong, testing its April 11 high in early trade, after posting a 79 percent increase in first quarter net profit, boosted by an increase in investment yield. Its Shanghai listing inched up 0.2 percent.

Bank of China rose 1.7 percent to its highest since early April after the country's fourth-largest lender posted quarterly net profit that grew 8 percent, broadly in line with expectations.

The bank said its non-performing loan ratio was 0.91 percent, down from 0.95 percent at the end of last year. Its net interest margin widened to 2.22 percent from 2.15 percent a year ago, setting the stage for the earnings of its "Big Four" Chinese banking peers later in the day

In Hong Kong, Industrial and Commercial Bank of China rose 1.1 percent, while China Construction Bank added 1.3 percent ahead of quarterly reports after market close on Friday.

PetroChina soared 2 percent after reporting a lower-than-expected 8 percent fall in first-quarter profit from a year earlier.


The Chinese airline sector saw divergent moves, tracking the contrasting quarterly net profits reported by Air China and China Southern Airlines late on Thursday.

Air China, Asia's second-largest airline by market value, inched up 0.3 percent after the company posted a 4 percent rise in first quarter net profit, while China Southern slid 4.5 percent after its quarterly net profit slumped a worse-than-expected 82 percent.

Friday's losses are set to be China Southern's worst since April 5 in Hong Kong and cut its 2013 gains to 3.8 percent. China Southern is now trading at a 37 percent discount to its forward 12-month earnings multiple, according to Thomson Reuters StarMine.

This is much bigger than Air China's 27 percent discount, but smaller than China Eastern Airlines' 47 percent discount. China Eastern slipped 0.9 percent ahead of its quarterly results after markets close on Friday.

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