Hong Kong shares rebound from 2-month low, banks limit China gains

Last Updated: Thu, Nov 14, 2013 04:50 hrs

* HSI +0.9 pct, H-shares +1.2 pct, CSI300 +0.6 pct

* China banking A-shares hit by spike in money rates

* Weigao Group surges 31 pct after returning to growth in Q3

* Key earnings Thursday: CRE, Sun Art Retail, Country Garden

By Clement Tan and Alice Woodhouse

HONG KONG, Nov 14 (Reuters) - Hong Kong shares rebounded from two-month lows early on Thursday, led by Chinese Internet giant Tencent Holdings and healthcare equipment provider Shandong Weigao Group as investors cheered their robust quarterly earnings.

Gains in mainland China markets were limited by weakness in the banking sector, roiled by a sharp spike in short-term money rates after the central bank drained funds from the open market for a second week running.

At midday, the Hang Seng Index, which had closed on Wednesday at its lowest since Sept. 4, was up 0.9 percent at 22,660.4 points. The China Enterprises Index of the top Chinese listings in Hong Kong rose 1.2 percent.

The CSI300 of the leading Shanghai and Shenzhen A-share listings edged up 0.6 percent after earlier hitting its lowest intra-day level in nearly three months. The Shanghai Composite Index climbed 0.5 percent.

All four benchmark indexes had on Wednesday suffered their biggest losses in at least two months after the initial communique from the conclusion of a key Communist Party policy meeting had disappointed expectations for more details about reform.

"It's looking a bit quiet today after big losses yesterday, weak volumes are probably exaggerating losses in banking A-shares from the spike in money rates," said Zhang Qi, a Shanghai-based analyst with Haitong Securities.

Mid-sized Chinese lenders were among the leading drags on mainland indexes. In Shanghai, China Minsheng Bank sank 1.4 percent to a three-month trough, while Industrial Bank fell 1.8 percent to its lowest since early September.

The People's Bank of China refrained from injecting funds at its second of two regular weekly open market operations on Thursday, resulting in a net drain of funds from the interbank market for a second week.

The rise in rates stems more from worries about further liquidity tightening as opposed to an actual shortage of cash, traders said. Investors are still uncertain how aggressively the PBOC is going to attack the excess cash that has aggravated inflation and pushed up property prices.


In Hong Kong, Chinese medical device company Shandong Weigao Group Medical Polymer rocketted 30.6 percent to reach a 10-week high after its positive third quarter earnings spawned upgrades from UBS and Credit Suisse analysts.

Investors cheered comments from its chief financial officer on an analyst call that the company should now comfortably meet 2013 guidance of 20 percent growth after a restructuring of its sales force.

Gains on the day helped Weigao shares swing from a 10 percent loss on the year to a 17.3 percent gain.

Shares of Tencent Holdings, which had closed on Wednesday at its lowest since Sept. 9 ahead of its earnings announcement, jumped 5 percent as investors cheered its 35 percent gain in online gaming revenue.

Key earnings announcements due later on Thursday include China-focused supermarket operators Sun Art Retail, China Resources Enterprises and Chinese property developer Country Garden.

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