Hong Kong shares snap 5-day winning streak, China weaker too

Last Updated: Thu, Sep 13, 2012 18:52 hrs

(Updates to close)

* HSI inches down 0.1 pct, but capped by chart resistance

* H-shares slip 0.1 pct, CSI300 down 0.9 pct, Shanghai Comp sheds 0.8 pct

* China banks weak on reports support infrastructure projects

* Sun Hung Kai Properties up ahead of better-than-expected earnings

By Clement Tan

HONG KONG, Sept 13 (Reuters) - Hong Kong shares slipped for the first time in six sessions in lackluster Thursday trade as investors waited on a U.S. Federal Reserve meeting at which policymakers could announce more measures to stimulate the world's biggest economy.

Mainland Chinese markets were also weaker with industrial sector shares dragged down by a commentary in the state media warning about the longer-term risks to the Chinese economy if Beijing were to launch a large stimulus plan.

The Hang Seng Index ended a choppy session down 0.1 percent to 20,047.6. It is up 1.2 percent this week after rising 1.6 percent last week largely on last Friday's 3.1 percent jump, its best single day gain in almost a year.

The CSI300 Index of the top Shanghai and Shenzhen listings shed 0.9 percent, while the Shanghai Composite Index lost 0.8 percent. Both indices are down 0.8 percent on the week after producing their best daily gains in eight months last Friday.

Still, markets have have largely held onto gains posted last week after China announced a raft of infrastructure project approvals, compared to the downward spiral which followed Beijing's last two interest rate cuts - suggesting investors are taking the latest developments as a stronger signal of Beijing's intent to shore up flagging growth.

"Last Friday's move up might be a bit violent, but you got to take it in the context of how beaten down the markets have been in the mainland this year," said a Shanghai-based manager of a Qualified Foreign Institutional Investor (QFII) fund.

"Last week's reports were an important easing signal from Beijing that they are still looking to stimulate the economy," the fund manager added, declining to be identified because he is not authorised to speak to the media.

Since last Thursday, he has upped his allocation to equities from 40 perccent of his portfolio to the maximum 70 percent while reducing allocations to cash and fixed income.

The Chinese banking sector was hurt on Thursday by a report in the state-run China Securities Journal saying that Beijing has told banks to give credit support to construction projects involving railways, roads and social housing.

This aggravated fears that bad debts could increase for the Chinese banking sector, which is saddled by debts from Beijing's stimulus in the aftermath of the 2008-09 financial crisis. Bank of China shed 0.4 percent in Hong Kong and 0.7 percent in Shanghai.

Heavy machinery makers such as Shanghai-listed Sany Heavy Industry and Shenzhen-listed Changsha Zoomlion were also weaker, losing 3.1 and 2.9 percent apiece.

With Thursday's losses, Bank of China has given up its gains in Shanghai from last Friday, but Sany and Zoomlion are both largely unscathed.


China Mobile slipped 1.3 percent and was the top drag on the Hang Seng Index after Apple Inc's announcement on Thursday that its new iPhone will go on sale from this Friday with a bigger screen and 4G wireless technology.

China Mobile is the mainland's biggest mobile operator, but does not carry iPhones on its networks. Its smaller rivals that do, China Unicom and China Telecom, each rose 2 and 2.6 percent.

Ahead of its earnings for the fiscal year that ended in June, Hong Kong property developer Sun Hung Kai Properties (SHKP) rose 0.8 percent to close at its highest level since March 26.

After markets closed, the world's second-largest real estate developed posted a record underlying HK$21.7 billion underlying profit, that bettered the HK$21 billion Thomson Reuters StarMine's mean estimate of 19 analysts. (Additional reporting by Vikram Subhedar; Editing by Sanjeev Miglani)

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