* HSI +0.4 pct, H-shares +0.7 pct, CSI300 -0.5 pct
* China banks lead HK rise, resurgent China markets chased
* Railway plays strong on reported $289 bln investment in
China over 3 yrs
* China Rongsheng hammered after warning of loss
By Clement Tan
HONG KONG, Dec 27 (Reuters) - Hong Kong shares tested fresh
17-month intra-day highs in holiday-thinned Thursday trade, led
by growth-sensitive Chinese counters as investors caught up on
strong gains in mainland markets during the 2-1/2 day break
taken for Christmas.
But onshore Chinese shares snapped a three-day winning
streak, slipping from their highest levels since July as
investors took profits on the banking sector, which has
outperformed in December.
The Hang Seng Index closed up 0.4 percent at
22,619.8, finishing near the day's lows after opening at its
highest intra-day level since Aug. 1, 2011. Chart resistance is
next seen at around 22,800, peaks seen in July and August 2011.
The China Enterprises Index of the top Chinese
listings in Hong Kong rose 0.7 percent. But the gains came in
turnover that was more than 30 percent below its average in the
last month and the lowest since Sept. 26.
In the mainland, the CSI300 of the top Shanghai
and Shenzhen listings closed down 0.5 percent at 2,444.6. The
Shanghai Composite Index shed 0.6 percent in relatively
healthy bourse volumes.
Both onshore indexes have now reversed losses on the year
after languishing for almost six months. They stayed above their
200-day moving average, a chart level both have struggled to
stay above for more than two weeks since May 2011.
"There's an element of catching up in today's trading in
Hong Kong," said Larry Jiang, chief investment strategist at
Guotai Junan International Securities.
"The strong A-share performance over the last few days is
definitely a factor and will continue to support gains in Hong
Kong as more details of reform and signs of earnings and
economic recovery emerge," Jiang added.
Official data on Thursday showed that annual growth of
China's industrial profits quickened to 22.8 percent in November
from October's 20.5 percent, reinforcing signs of a steady
Chinese railway counters added to strong 2012 gains after
the official China Securities Journal reported that the amount
of domestic railway investment could hit 1.8 trillion yuan ($289
billion) in the next three years, according to the country's top
economic planning agency.
China Railway Construction jumped 2.3 percent in
Hong Kong and is now up 109 percent in 2012, compared to the
14.2 percent rise on the China Enterprises Index and the Hang
Seng Index's 22.7 percent jump.
Despite an outperformance that has set it up for its first
annual gain since it listed in 2008, China Railway Construction
is still trading at a 20 percent discount to its historical
median 12-month forward earnings multiple, according to Thomson
This suggests further gains could be in store in 2013 with
Beijing seen still relying on infrastructure investment to prop
up growth in the world's second-largest economy.
CHINA FINANCIALS RISE, BUT NOT ALL ROSY
Reflecting the improved sentiment towards Chinese equities,
the Chinese financial sector has seen strong gains for the
sector in December.
China Merchant Bank is up 26 percent on
the month in Shanghai and set for its best monthly showing since
June 2009 despite shedding 1.4 percent on Thursday, as investors
took profit on the sector for a second successive session.
But Chinese banking shares rose in Hong Kong. Bank of China
(BOC) gained 0.6 percent, while China
Merchant Bank jumped 2.7 percent.
New China Life Insurance rose 1.8 percent to
HK$28.65 in heavy volumes after more than 17 million shares were
sold at HK$28.39 each by an unidentified shareholder, according
to a Hong Kong-based trader at a major European brokerage.
Still, bad debt fears linger over the Chinese banking sector
and some of the more growth-sensitive sectors.
China is considering a mechanism to cap local government
debt, a researcher affiliated with the Ministry of Finance was
cited as saying, as policymakers debate deficit levels for a
year in which a wave of debt will come due.
China Rongsheng Heavy Industries Group warned of
an annual net loss for 2012 on sharp declines in orders and
prices of new vessels due to the shipping industry's downward
The warning contrasted with a consensus estimate for a 584
million yuan ($93.76 million) net profit for the year ending
December 2012, according to 11 analysts polled by Thomson
Shares of China's largest private shipbuilder tumbled 7.4
percent on Thursday to their lowest close since Dec. 6. It is
still down 41.6 percent on the year.