Hong Kong shares rise, shrugging off tepid China markets

Last Updated: Mon, Jun 17, 2013 05:00 hrs

* HSI +1.3 pct, H-shares +1.4 pct, CSI300 flat

* H-share index looks for 1st gain in 13 days

* Fast money roll into HK large caps battered by QE worries

* Clean energy firms aided by China's anti-pollution pledge

* Huijin's A-share purchase lifts NCI, Everbright Bank

By Clement Tan

HONG KONG, June 17 (Reuters) - Hong Kong shares, which have fallen the past five weeks, started the new one on a positive note as buyers in search of short-term gains came into battered counters.

Mainland China markets lingered near six-month lows. Cement and coal counters were hit by measures - announced late Friday by the State Council - to combat air pollution, which will curb growth of energy-sapping industries.

At midday, the CSI300 of the top Shanghai and Shenzhen A-share listings was flat. The Shanghai Composite Index inched up 0.1 percent in persistently weak volumes with cash rates staying tight.

That may remain the case after Financial News, a newspaper backed by the People's Bank of China, reported on Monday that the central bank is unwilling to inject funds into the interbank market because banks in difficulty have likely bypassed regulatory caps on lending.

The Hang Seng Index was up 1.3 percent at 21,251.2 points. The China Enterprises Index of the leading Chinese listings in Hong Kong, which has fallen the past 12 sessions, climbed 1.4 percent.

Gains on Monday lifted the H-share index from its most technically oversold level since August 2011. It had slumped 5 percent last week, its worst weekly showing in more than a year. Last week was also the fifth straight losing one for the H-share index.

"The fast money is rolling into the defensive, Hong Kong large caps that have been hit quite badly by the QE tapering talk in the last few weeks," said Steven Lam, an analyst with Karl Thomson Securities.

U.S. bond yields have spiked, roiling currency and stock markets, particularly in emerging markets, after Federal Reserve chairman Ben Bernanke jolted investors on May 22 by saying the bank might "take a step down" in the pace of bond purchases in coming months.

A two-day meeting of the U.S Federal Reserve policy-making panel ends on Wednesday, with markets looking to Bernanke for fresh hints if and when the central bank will pare its aggressive monetary stimulus.

High yielding, defensive Hong Kong property developers were broadly higher, although real estate investment trusts (REITs), recipients of much of the inflows from waves of central bank easing since 2008, underperformed on the day.

Henderson Land climbed 3.7 percent in a second-daily gain, but Link REIT slipped 0.5 percent.

Cheung Kong Holdings rose 3.3 percent after the company said it will buy Dutch waste processing firm RAV Water Treatment I B.V. for 943.68 million euros ($1.26 billion), as part of an overseas expansion drive that has targeted infrastructure assets offering steady income.

Hong Kong and China Gas jumped 4.1 percent, extending a rebound from a seven-month closing low last Thursday. It is still down 11 percent from a May 20 peak and currently trading at a 6 percent premium in its 12-month forward earnings multiple, according to Thomson Reuters StarMine.


China Everbright Bank climbed 2.4 percent in Shanghai, while New China Life Insurance soared 4.4 percent in Hong Kong and 4.8 percent in Shanghai after China state investor Central Huijin bought 100 million yuan worth of A-shares in those companies.

Monday's gain reduced Everbright's decline in 2013 to 1.6 percent, and spurred rises for other mid-sized banks whose share prices have been under pressure from the tight interbank funding market.

Alternative energy stocks were lifted by moves by China's cabinet to fight air pollution, which also involves a pledge to support the sector. In Hong Kong, GCL-Poly Energy spiked 6.6 percent to a three-month high and China Longyuan jumped 4.6 percent.

In Shanghai, Anhui Conch Cement tumbled 2.5 percent and Yangquan Coal fell 2.1 percent.

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