Hong Kong shares snap 4-week winning streak, underperform China

Last Updated: Fri, Dec 21, 2012 09:10 hrs

* HSI -0.7 pct on Friday, -0.4 pct this week

* CSI300 -0.5 pct on Friday, +0.7 pct this week

* HK investors cut risk ahead of holiday week on "cliff" fears

* Anta Sports jump, helped by UBS price target upgrade

By Clement Tan

HONG KONG, Dec 21 (Reuters) - Hong Kong shares posted their worst day in three weeks and their first weekly loss in five on Friday, as investors cut risk in the last full trading week for the year after talks stalled over a deal to avert a fiscal crisis in the United States.

Onshore Chinese markets slipped from four-month highs, with heavyweight alcohol counters hit by more reports of product contamination. Still, they outperformed offshore peers for a third straight week.

The Hang Seng Index shed 0.7 percent in its worst daily loss since Dec. 3 to knock the benchmark off a near 17-month high to 22,506.3. It slipped 0.4 percent this week, with any gains next week seen capped by chart resistance at around 22,800, the peaks seen in July and August 2011.

The China Enterprises Index of the top Chinese listings in Hong Kong shed 1.1 percent on Friday and 0.7 percent this week. This was the first weekly loss in five weeks for both Hong Kong indexes.

Hong Kong turnover stayed under its 20-session moving average for only the third time since Dec. 4, which along with strength in defensive counters such as Hong Kong utilities, further pointed at risk aversion on the day.

On Friday, the CSI300 of the top Shanghai and Shenzhen listings lost 0.5 percent, while the Shanghai Composite Index shed 0.7 percent. On the week, they recorded their third-straight weekly gain, rising 0.7 and 0.1 percent, respectively.

"It certainly looks like people are cutting risk (in Hong Kong) before the holidays next week, but things are not that bad," said Benjamin Chang, chief executive officer of LBN Advisors, a firm that manages more than $400 million in two China funds.

Hong Kong financial markets will shut at noon on Monday and only resume trading on Thursday for the Christmas holidays. Mainland Chinese markets will stay open the entire week.

Global financial markets were roiled after Republican lawmakers on Thursday delivered a stinging rebuke to their leader, House of Representatives Speaker John Boehner, when they failed to back an effort designed to extract concessions from President Barack Obama in fiscal cliff talks.

In Hong Kong, Chinese banking and energy majors came under pressure. China Coal Energy Co Ltd, the country's second-largest coal producer and Industrial and Commercial Bank of China (ICBC), the country's largest lender, each fell 2 and 2.1 percent.

Friday's losses trimmed ICBC's gains on the year to 18.4 percent, compared to the 22 percent jump on the Hang Seng Index. The share had bounced 40 percent from a July 13 low and on Thursday it had stood at its highest level since early March.

Chinese alcohol counters were hit by fresh mainland media reports of more products containing toxic plasticizer elements, crimping a mild December rebound from the November rout suffered when allegations first emerged.

Jiugui Liquor fell 3.8 percent, while the sector's premium brand Kweichow Moutai fell 0.8 percent. Moutai is now just up 0.2 percent on the month after diving 12.7 percent in November, its worst monthly loss in more than two years.


Bucking broader weakness, Anta Sports jumped 3 percent to HK$6.54 after UBS raised their price target from HK$7.50 to HK$9, expecting Anta to be among the survivors of an ongoing consolidation in Chinese sportswear brands.

China Machinery Engineering Corp (CMEC) jumped almost 17 percent in its listing debut in Hong Kong on Friday after a $500 million initial public offering.

Chinese property counters listed in Hong Kong extended their outperformance on the year, but those listed in the mainland slid after a news report raised fears of more sector curbs following data earlier this week that showed home prices rose in November for the fourth month in five.

The state-run China Securities Journal reported on Friday that the housing ministry is conducting an investigation into property market trends, and industry insiders expect policy-makers to launch more property tightening measures.

Poly Real Estate shed 1.5 percent in Shanghai, trimming 2012 gains to 45 percent. China Vanke declined 0.5 percent in Shenzhen, trimming 2012 gains to 26.3 percent. This compares to the 1.1 percent gain for the CSI300.

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