Hong Kong shares ease as developers sink again, China up

Last Updated: Tue, Oct 30, 2012 05:10 hrs

* HSI -0.5 pct, H-shares -0.7 pct, CSI300 +0.2 pct

* HK developers in the red again after curbs announced last Friday

* ICBC, BoCom weak ahead of Q3 earnings after market close

* BYD hammered after reporting 94 pct slide in Q3 net profit

By Clement Tan

HONG KONG, Oct 30 (Reuters) - Hong Kong shares weakened in morning trading on Tuesday, with local developers slipping further into the red in the wake of curbs on real estate purchases in the territory announced last Friday.

Chinese banks were among the losers, as profit taking emerged following gains prompted by strong third-quarter earnings from three of China's "Big Four" banks. The fourth, Industrial and Commercial Bank of China (ICBC) , is due to post its results later on Tuesday.

The Hang Seng Index went into the midday trading break down 0.5 percent. It is now down 1.8 percent from last Thursday's 2012 closing high. The China Enterprises Index of the top Chinese listings in Hong Kong shed 0.7 percent.

In the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings edged up 0.2 percent, while the Shanghai Composite Index was up 0.1 percent.

"It's mostly range-trading at the moment, but Chinese companies that have posted good third-quarter earnings should get a lift if we get a positive China PMI on Thursday," said Edward Huang, equity strategist at Haitong International Securities.

Beijing is due to post its official PMI on Nov 1 at 0100 GMT. The PMI were expected to show factory activity accelerated in October to its fastest pace in five months, strengthening hopes that growth is recovering in the world's second-largest economy.

ICBC and Bank of Communications , China's fifth-largest lender, slipped 1.4 and 1.8 percent respectively ahead of their third-quarter corporate earnings expected after markets close on Tuesday.

Losses on Tuesday trimmed their October gains to 10.3 and 6.8 percent respectively, but both are still trading at a 44 and 57 percent discount to its historical median 12-month forward price-to-book value, according to Thomson Reuters StarMine.

In the past 30 days, analysts have upgraded their earnings-per-share estimates for both banks by an average of about 3 to 4 percent, according to StarMine.

Shares of Warren Buffett-backed Chinese automaker BYD Co Ltd slumped 5.5 percent in Hong Kong and 1.3 percent in Shenzhen after posting a 94 percent slide in third-quarter net profit due to a slumping domestic market and its money-losing solar energy business.


On Tuesday, New World Developments slipped a further 2.7 percent after sinking 6.4 percent on Monday. It is still up 88 percent on the year, compared to the 16 percent rise on the Hang Seng Index.

The Hong Kong government had late on Friday imposed a 15 percent tax on foreign and corporate real estate buyers and stiffened the resale stamp duty fees in the hope of calming the city's property prices, which have surpassed historical highs hit in 1997.

Henderson Land slipped 1.1 percent and Wharf Holdings lost 1.5 percent, but Hang Lung Properties bucked weakness in the sector, up 1.1 percent after also outperforming on Monday with a 1.8 percent loss.

Dealers cited the company's sizeable exposure to the mainland Chinese property market.

The Chinese property sector was strong, particularly in mainland markets, on Tuesday after the second-largest player in the sector by market capitalization, Poly Real Estate posted a 95 percent rise in third-quarter earnings late on Monday.

Poly jumped 2.4 percent in Shanghai, helping the Shanghai property sub-index rise 1.3 percent.

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