Hong Kong shares hover at 5-mth high, China up too

Last Updated: Tue, Oct 16, 2012 06:25 hrs

(Updates to midday)

* HSI +0.3 pct, CSI300 +0.8 pct, Shanghai Comp +0.6 pct

* China property sector strong on signs of improving home sales

* Investors take profits on outperforming Chinese banking sector

* Tingyi weak after proposed placement fails to take off

By Clement Tan

HONG KONG, Oct 16 (Reuters) - Hong Kong shares hovered at a five-month high on Tuesday, lifted by strength in Chinese property stocks after data showed improving home sales in the mainland.

Gains on the index were, however, capped by a decline in banking stocks as investors sought profits from a rally last week on news that Central Huijin, a unit of China's sovereign wealth fund China Investment Corp, will increase stakes in the "Big Four" Chinese banks

In the mainland, the CSI300 of the top Shanghai and Shenzhen listings advanced 0.8 percent, while the Shanghai Composite Index gained 0.6 percent.

The Hang Seng Index rose 0.3 percent to 21,208.8 at midday, after briefly testing the highest intra-day levels since May 2. The China Enterprises Index of the top Chinese listings in Hong Kong inched up 0.1 percent.

Volumes were largely concentrated in the Chinese banking and property sectors even as broader turnover stayed lackluster in both markets.

"Investors are sticking with sectors that they have reason to be more certain about. This rotation suggests they are also positioning themselves for the next leg up," Edward Huang, an equity strategist with Haitong International Securities.

China Resources Land jumped 4.4 percent, while China Overseas Land gained 2.6 percent after property consultancies Centaline and Soufun said property transactions were improving in the mainland.

Both stocks were laggards last week, losing 3.7 and 2.2 percent respectively, compared to the 0.6 percent gain for the Hang Seng Index.

China Resources Land is up 37 percent on the year after two straight annual losses, but is still trading at a forward 12-month earnings multiple that is a 21 percent discount to its historical median, according to Thomson Reuters StarMine.

Its current 12-month forward price-to-book multiple is just 0.4 percent below its historical median, at 1.3 times.

Chinese banks were broadly weaker, with China Construction Bank (CCB) down 1.6 percent in Hong Kong and 0.2 percent in Shanghai. CCB had its best week in 11 in Hong Kong last week, rising 5.3 percent.


Ping An Insurance rose 0.8 percent in Hong Kong and 0.7 percent in Shanghai after its posted a 12 percent growth in premium income for September from a year ago.

Ping An posted a 17 percent growth in life insurance premiums in the third quarter from a year ago, up from 10 percent in the second quarter and 2 percent in the first.

"Overall, these numbers suggest Ping An's new business volume growth may well be turning positive, which should improve its new business value (NBV) outlook," Barclays Capital analysts said in a note dated Oct. 16.

Chinese food and beverage giant Tingyi Holdings shed 2.3 percent after a proposed $120 million placement failed to materialize. Sources said investors were deterred by the small 1 percent discount to its Monday's closing price. (Additional reporting by Vikram Subhedar; Editing by Sanjeev Miglani)

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