Hong Kong shares rise on encouraging data, China struggles

Hong Kong shares rise on encouraging data, China struggles

Last Updated: Thu, Apr 11, 2013 09:20 hrs

* HSI +0.3 pct, H-shares +0.1 pct, CSI300 -0.3 pct

* China banks buoyed after March lending topped forecasts

* China Eastern Airlines lifted by Q1 passenger traffic

* Lenovo loses 6 pct after IDC's grim Q1 tech report

By Clement Tan

HONG KONG, April 11 (Reuters) - Hong Kong shares rose for a third straight day after official data showed Chinese lending and money supply exceeded expectations in March, dissipating credit tightening fears, but Thursday's trading volume was low.

Mainland Chinese markets stayed sluggish, with Shanghai volume the lowest in a week. They ended the day lower after starting up almost 1 percent as benchmark indexes again struggled at key long term technical support levels.

The Shanghai Composite Index and the CSI300 of the leading Shanghai and Shenzhen A-share listings each closed down 0.3 percent, but finished just above their 100-day moving averages.

Shanghai volume stayed anemic, some 18 percent under its average in the past month as the central bank has drained 17 billion yuan from the mainland financial system for the week.

The Hang Seng Index rose 0.3 percent to 22,101.3, helping the benchmark end 1.8 percent up from Monday's four-month closing low. The China Enterprises Index of the top Chinese listings gained 0.1 percent.

Hong Kong turnover was $7.5 billion, 15 percent below its average in the past month. Short selling interest stayed high, accounting for 9.4 percent of total turnover, versus the 8 percent historic average.

Central bank data showed on Thursday that Chinese banks made 1.06 trillion yuan ($171.2 billion) of new local currency loans in March, well above market expectations for 850 billion yuan, buoying the Chinese banking sector.

But total social financing, the central bank's broad measure of liquidity in the economy that includes non-bank lending, surged to 2.54 trillion yuan in March from February's 1.07 trillion yuan, alluding to the risk that lingers in the mainland financial system.

"The most important thing about this current batch of data is that the Chinese economy is more stable than previously feared," said Larry Jiang, chief investment strategist at Guotai Junan International Securities.

"But I still won't aggressively add to positions now, only selectively buying on dips companies with good fundamentals," Jiang added, while flagging the central bank's draining of liquidity this week as a sign of lingering policy concern.

Thursday's data came after inflation data on Tuesday had came in less benign than expected and trade data on Wednesday that showed an unexpected trade deficit in March although import growth was far in excess of expectations.

On Thursday, Chinese banks were broadly higher. Mid-sized lender China Minsheng Bank climbed 0.8 percent in Hong Kong, thought it was down more than 17 percent from its Feb. 4 peak. Its Shanghai listing crawled up 0.1 percent on the day.

More data is expected next week. First quarter GDP growth data is due April 15, along with industrial output, retail sales and urban investment data for March.

China Eastern Airlines rose 3.1 percent in Hong Kong and 2 percent in Shanghai after passenger traffic in March came in higher than expected as passengers appeared to shrug off its regulatory approval plan for a private placement of almost 700 million new A shares.

The carrier has now clawed back about half of its 8.3 percent tumble in Hong Kong last Friday on fears about bird flu, which remains a risk for the stock because the airline is based in Shanghai, the centre of the current outbreak.

Lenovo Group dived 5.8 percent, tracking a selloff in Asian technology after a leading tech tracking firm said personal computer sales plunged 14 percent in the first quarter. It has now slid 21 percent from a March 1 peak.

Lenovo was hammered despite being the only PC maker to come out relatively unscathed in IDC's grim Q1 report card, underscoring fears that the Chinese PC maker's market-share gains are coming at the cost of margins.

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