Hong Kong shares set for best day in 2 months, Vanke leads China higher

Last Updated: Thu, Feb 28, 2013 05:01 hrs

* HSI +1.2 pct, H-shares +1.9 pct, CSI300 +0.9 pct

* Indexes set for February loss, HK set for worst month since May

* Vanke's positive earnings lift China property sector

* SJM sinks after earnings disappointment, BofA-ML downgrade

By Clement Tan

HONG KONG, Feb 28 (Reuters) - Hong Kong shares are set to post their best daily gain in two months on Thursday, with growth-sensitive counters among the biggest gainers after U.S. Federal Reserve Chairman Ben Bernanke reaffirmed his commitment to strong stimulus.

Bernanke, facing a congressional panel for a second day, also downplayed signs of internal divisions, saying the policy of quantitative easing has the support of a "significant majority" of top central bank officials.

Mainland Chinese markets also rose, with China Vanke buoying gains in the property sector after the country's largest developer by sales posted positive 2012 earnings.

The Hang Seng Index went into the midday break up 1.2 percent at 22,850.9. If gains hold, this will be its best daily showing since Jan. 2. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 1.9 percent.

In the mainland, the CSI300 of the top Shanghai and Shenzhen listings rose 0.9 percent, while the Shanghai Composite Index gained 0.6 percent as midday bourse volume sank to its lowest since Monday.

Gains so far helped trim February losses for all four indexes. The CSI300 is now down 2.6 percent, while the Shanghai Composite is down 2.4 percent. The China Enterprises Index, down more than 6 percent, and the Hang Seng Index, down almost 4 percent, are set for their worst monthly showing since May 2012.

"We have had quite a bad month, but this is after the strong rally we had in the two months before," said Larry Jiang, chief investment strategist at Guotai Junan International Securities.

"I don't think we need to get overly anxious at this point. There's still a lot of money in the market even though inflows have slowed. Everybody's waiting to see what's coming out of the meetings next week," Jiang added.

In Hong Kong, the Chinese coal sector posted among the strongest gains on the day. China Shenhua Energy Co Ltd jumped 4.8 percent to its highest in a week.

China Vanke jumped 4.2 percent to its highest in almost two weeks after its second half net income beat expectations. Its strong corporate earnings lifted sector peers, with Poly Real Estate up 3 percent.

In Hong Kong, China Resources Land jumped 3.4 percent, while China Overseas Land rose 1.8 percent to almost claw back losses on the month.

China's property market has been rife with speculation - about rising house prices and what the new government may do to curb them once it takes office next week - that has tested stock investors' nerves.

The annual Chinese People's Political Consultative Conference and National People's Congress, where Xi Jinping is expected to be confirmed as president, start in Beijing on March 3 and 5, respectively.


Macau casino operator SJM holdings dived 3.7 percent after posting a weaker-than-expected 2012 net profit increase that triggered brokerage downgrades, including one from Bank of America-Merrill Lynch.

BofA-ML downgraded its outlook on the stock from "neutral" to "underperform" while cutting its target price from HK$22 to HK$21.10, seeing limited upside with SJM's stock price still up 7.8 percent in the year to date, compared to the Hang Seng Index's 0.9 percent rise.

Hong Kong property developer Sun Hung Kai Properties climbed 0.8 percent ahead of its first half corporate earnings later in the day. Up 3.3 percent on the year, it is trading at a 16 percent discount to its historical 12-month forward earnings multiple, according to Thomson Reuters StarMine.

In the last 30 days, 3 of 20 analysts have downgraded their full year earnings per share estimates for Sun Hung Kai Properties by an average of about 2 percent.

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