Hong Kong shares hit 2012 high, China mixed ahead of earnings

Last Updated: Wed, Oct 24, 2012 09:40 hrs

(Updates to close)

* HSI +0.3 pct, H-share -1 pct, CSI300 -0.2 pct

* HKEx at 6-mth high, HKMA intervenes again to stem HKD strength

* China Coal up 2 pct after in line Q3 earnings

* Esprit hit after announcing fund raising plans

By Clement Tan

HONG KONG, Oct 24 (Reuters) - Hong Kong shares rose to their highest level for the year on Wednesday, buoyed by expectations of further capital inflows into the city said to be mainly due to a third round of quantitative easing by the United States Federal Reserve.

The Hang Seng Index ended up 0.3 percent at 21,763.8, its ninth-straight daily gain helping the benchmark to its highest 2012 close after hitting its highest intra-day level this year at 21,802.5 in late afternoon trade.

Wednesday's gains were the benchmark's ninth in a row, equalling a winning streak recorded in June 2010. It last rose 10 sessions in a row in June 2006. The Hang Seng Index is now up 18.1 percent this year after slumping 20 percent in 2011.

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

"Incoming fund flows are sure to further buoy Hong Kong markets further, with local developers and Chinese construction-related plays likely to see further short-term buying interest," Edward Huang, equity strategist with Haitong International Securities said.

The Hong Kong Monetary Authority (HKMA) intervened in the currency market for the fourth time since Oct. 19 on Wednesday, selling a total HK$14.4 billion ($1.85 billion) of Hong Kong dollars to weaken the territory's currency and protect its 29-year-old peg to the U.S. dollar.

On Monday, shares of bourse operator Hong Kong Exchange (HKEx) jumped 2.9 percent to its highest close since late April. After lagging the broader market for most of the year, it is now up more than 10 percent this month after surging 13.8 percent in September.

The Hong Kong property sector was also among the outperformers. Cheung Kong Holdings jumped 4.4 percent, extending its 2012 gains to nearly 30 percent. Sun Hung Kai Properties rose 3.6 percent.

With valuations of some Chinese growth-sensitive names near historic lows, market watchers expect further gains leading into China's 18th Party Congress meeting starting on Nov. 8.

A rise in the HSBC Flash Manufacturing Purchasing Managers Index for China to a three-month high of 49.1 in October with gains in new orders and output provided further signs that the slowdown in the world's second-largest economy could be stabilizing.

"Talking to my clients, it seems their pessimism on China is ebbing after recent data," said Huang.


Third-quarter corporate earnings remained a focus. Investors rewarded in-line results, particularly for battered growth-sensitive sectors, partly on expectations that a stabilizing Chinese economy could help improve profitability.

China Coal Energy Co Ltd rose 2.1 percent in Hong Kong after posting a 22 percent decline in third-quarter net profit late on Tuesday that were largely in line with expectations.

After lagging the broader Hong Kong market for much of this year, shares of China's second-largest coal producer are now up almost 11 percent in October after jumping 10 percent in September.

It is still down 6.2 percent for the year, compared to the Hang Seng Index's 18.1 percent gain and the China Enterprises Index's 7.1 percent rise. China Coal currently trades at a 47 percent discount to its historic median 12-month forward price-to-book value, according to Thomson Reuters StarMine.

Anhui Conch Cement slipped 3.9 percent in Hong Kong, trimming its 2012 gains to 12.1 percent ahead of its third-quarter earnings expected later on Wednesday.

Currently trading at 8 percent discount to its historical 12-month forward earnings median, eight out of 28 analysts have upped their full year earnings-per-share estimates for Anhui Conch Cement by an average of 0.4 percent in the last 30 days, according to StarMine.

Esprit Holdings plunged 9.5 percent after it announced plans to raise $677 million to fund a restructuring of its key businesses.

Losses on Wednesday brought Esprit's share price to its lowest since early August, paring gains after the company appointed an executive from larger rival Inditex as its new CEO. (Editing by Sanjeev Miglani)

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