Hong Kong shares head for 4th straight gain, China up too

Source : REUTERS
Last Updated: Wed, May 08, 2013 05:10 hrs

* HSI +0.6 pct, H-shares +1 pct, CSI300 +0.4 pct

* Zoomlion surges on China excavator sales

* Esprit dives after profit warning, adds to HSI exclusion noise

* China Modern Diary slides after Mengniu raises stake

By Clement Tan

HONG KONG, May 8 (Reuters) - Hong Kong shares were headed for a fourth-straight gain on Wednesday, while onshore China markets also extended a similar winning streak after robust Chinese April trade data helped extend a rally in growth-sensitive counters.

But indexes in both markets went into the midday break off the day's highs, with volumes seeing a small rise. With Beijing having moved to quell inflows last week, some in the market were sceptical about the official import and export figures for April reflecting real demand.

At midday, the Hang Seng Index was up 0.6 percent at 23,191.1, after earlier nearing highs of March 12, when it hit a peak of 23,262. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 1 percent. If gains hold, this would be both index's fourth-straight daily gain.

The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 0.4 percent, while the Shanghai Composite Index inched up 0.3 percent after both earlier tested their highest since end-March.

"There's definitely some scepticism on the trade data, but the beat is helping to magnify the gains for some of the more down-trodden cyclical stocks," said Wang Ao-chao, UOB Kay Hian's Shanghai-based head of research.

"Investors are just rotating into these beta names, but there's nothing to suggest much has fundamentally changed too much. I would actually also advise clients to buy into some of the quality defensives on weakness," Wang added.

Zoomlion Heavy Industry is set for its best day in five months in Hong Kong, surging 6.2 percent after the China Construction Machinery Association said excavator monthly sales in the mainland posted year-on-year growth in April for the first time in two years.

Gains so far on Wednesday helped Zoomlion cut 2013 losses to 27.5 percent, compared to the 1.8 percent slide on the H-share index. Its Shenzhen listing rose 1 percent, while larger rival Sany Heavy Industry climbed 1.7 percent in Shanghai.

China Modern Diary is headed for its worst daily loss in 17 months, diving 7.2 percent after China Mengniu Diary purchased a HK$3.18 billion ($409.78 million) stake from KKR-backed Advanced Dairy SPA and CDH-backed Crystal Dairy SPA at HK$2.45 per share, a 12.2 percent discount from its Tuesday closing price.

The purchase raised Mengniu's stake in China Modern to 28 percent. Mengniu shares in Hong Kong were up 0.7 percent.


Esprit Holdings is headed for its worst day in almost seven months, tumbling 5.7 percent after it warned of substantial losses in the second half due to soaring costs related to store closures and acquisitions in China.

The profit warning is adding to chatter of its possible exclusion from the Hang Seng Index, when the index manager releases its quarterly review after markets close this Friday.

HSBC rose 1.5 percent after first-quarter earnings nearly doubled due to the bank's three-year efficiency drive and a halving in bad debt charges.

Hong Kong Exchange slipped 0.6 percent from Tuesday's eight-month closing high ahead of its quarterly earnings.

At the midday break, the largest exchange operator in Asia posted net profit amounting to HK$1.2 billion ($154.64 million) in the first quarter, surpassing expectations for HK$932 billion.

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