* HSI +1.3 pct, H-shares +1.4 pct, CSI300 -0.5 pct
* Better China data has encouraged flows into Chinese stocks
* Smaller Chinese banks up on reported lower RRR dispension
By Clement Tan
HONG KONG, Nov 2 (Reuters) - Hong Kong shares jumped to
their highest level in 15 months on Friday, as fund inflows into
the Chinese territory buoyed hopes of further gains leading into
the year's end and encouraged investors to build riskier
Positive U.S. consumer confidence and private-sector jobs
data also helped, ahead of a non-farm payrolls report later in
the day that is expected to show U.S. companies added workers in
October at the fastest pace in eight months.
The Hang Seng Index went into the midday trading
break up 1.3 percent at 22,099.8, breaking resistance at about
22,000 on its way to its highest since early August 2011. It is
up 2.3 percent on the week.
Improving macro-economic data from China has encouraged
fresh money flows into Chinese equities, and market turnover for
the Hong Kong bourse has risen about 20 percent on a daily
average basis since the start of September.
Although flows into equity funds slowed down slightly last
week, for the third time in a row, China equity funds ranked
highest in terms of weekly flows, a Citi report said on Friday.
"We could see more gains from here because funds will need
to chase performance as the year draws to a close," said Alan
Lam, Greater China equity analyst.
"Earnings were mostly in line and misses have not been too
major. With data pointing to the China economy stabilizing, we
may see increased interest in Chinese equities after political
uncertainty is alleviated after the 18th Congress meeting," Lam
The China Enterprises Index of the top Chinese
listings in Hong Kong, or the H-share index, jumped 1.4 percent
and is up 3.8 percent this week.
Lam said H-shares would lead any further gains, noting they
are up only 9 percent on the year compared to a 20 percent climb
for the Hang Seng.
But on the mainland, the CSI300 shed 0.5 percent,
while the Shanghai Composite Index slipped 0.3 percent,
trimming weekly gains to 1.7 and 1.6 percent respectively.
Bourse operator Hong Kong Exchange (HKEx) jumped
1.9 percent to its highest in more than six months on
anticipation inflows would continue.
Chinese banks were also stronger, with shares of smaller
players seeing the bigger percentage gains on the day.
The official China Securities Journal reported that the
country's central bank will promote lending to small businesses
by letting small and medium-sized financial institutions that
meet loan growth requirements maintain relatively low reserve
In Hong Kong, China Minsheng Bank rose 1.8
percent, while Industrial and Commercial Bank of China (ICBC),
the country's largest lender, rose 1 percent.
Shares of Chinese auto parts maker Zhejiang Shibao Co Ltd
jumped more than six times on its Shenzhen
debut, but the firm was forced to cut its fundraising plan by
more than 90 percent and trading was suspended twice after
triggering turnover circuit breakers and hitting a price cap.
Shibao shares in Hong Kong were down 1.4 percent, but up
almost 15 percent in Shenzhen.
SECTOR ROTATION TO SWITCH?
In Hong Kong, the rotation into Chinese equities in Hong
Kong is likely to come at the expense of the outperforming local
property sector, as the city's government looks to rein in
housing prices that have recently surpassed 1997 highs.
Hong Kong may take further measures to control runaway
property prices but the Asian financial centre is likely to
avoid steps such as a capital gains tax that would be
complicated, Kong Kong's leader, Leung Chun-ying, said on
Still, most property stocks rose on Friday, paring heavy
losses made this week on the Hong Kong government's announcement
of home purchasing curbs aimed at foreign demand.
New World Development gained 1.5 percent, but is
still down 5 percent this week, set to be its worst since it
slumped 8.4 percent in the week ending May 20. New World is
still up 96 percent this year, a key contributor to the Hang
Seng Index's 20 percent rise.