Hong Kong shares up on M&A hopes; China slips

Fri Nov 13, 2009 12:51am EST

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 (Updates to midday)
 By Sui-Lee Wee and Claire Zhang
 HONG KONG/SHANGHAI, Nov 13 (Reuters) - Hong Kong stocks rose
0.11 percent in midday trade on Friday, as a spurt of corporate
takeover talk in the financial sector offset concerns about weak
U.S. consumer spending.
 Taifook Securities (0665.HK) rose as much as 9.9 percent to
to HK$5.00, its highest since January 2008, after Reuters
reported on Thursday that China Construction Bank (0939.HK) was
in talks to buy control of the brokerage to give it a solid
footing in Hong Kong's lucrative retail securities market.
 By midday, the stock, which jumped 13 percent on Thursday,
traded at HK$4.63, up 3.3 percent from the previous close.
 But Bank of East Asia (0023.HK), Hong Kong's No.5 bank, was
the top loser among index heavyweights after the lender said it
was not in talks on a potential acquisition. [ID:nHKG328800]
The stock fell 4.4 percent to HK$32.55.
 Rumours that Malaysian conglomerate Guoco Group (0053.HK)
could be interested in BEA had sent the bank's shares up 26
percent in the last two days.
 Brokers said the flurry of takeover talk is fueling optimism
about share values.
 "Every couple of years, we have takeover stories on Hong Kong
banks," said Howard Gorges, director at South China Brokerage.
"People are punting and chasing stories in second-line
 "There's certainly some catch-up value (in these stocks) as
compared to the big ones," he said. "It's a reflection of the
amount of cash around and underlying confidence in the market."
 The benchmark Hang Seng Index .HSI rose 24.2 points to
22,421.77 at midday. Turnover increased slightly to HK$41.2
billion ($5.3 billion), from midday Thursday's HK$40.97 billion.
 The China Enterprise Index .HSCE of top locally listed
mainland Chinese stocks gained 0.19 percent to 13,350.50.
 Simsen International (0993.HK) jumped as much as 52 percent
to HK$0.47, its highest since November 2007, after the brokerage
said its controlling shareholders were in preliminary talks with
a potential acquirer.
 By midday, the stock traded at HK$0.40, up 29 percent from
the previous close.
 Shui On Construction and Materials Ltd (0983.HK) rose 5.7
percent to HK$12.26 after Reuters reported that the firm and
Lafarge (LAFP.PA), the world's largest cement maker, are set to
spin off their cement joint venture, hoping to raise $500
million-$600 million from a Hong Kong initial public offering in
2010. [ID:nHKG88574].
 China's key stock index fell 0.98 percent, hit by broad-based
profit-taking after the market peaked at three-month highs early
in the week.
 But brokers said sentiment remained strong due to the upbeat
outlook for the economy and corporate earnings.
 The Shanghai Composite Index .SSEC ended the morning at
3,141.874 points.
 Losing Shanghai A shares outnumbered gainers by 662 to 218,
while turnover rose to 81 billion yuan ($12 billion) from
Thursday morning's 74 billion yuan.
 Share prices and trading volume soared on the much smaller
foreign currency-denominated B share market, as expectations
mounted for renewed yuan appreciation against the dollar, with
U.S. President Barack Obama expected to raise concerns about
currency issues in his visit to China next week.
 There has also been long-running speculation of a possible
merger of little traded B shares with yuan-denominated A shares.
 The Shanghai U.S. dollar-traded B-share index .SSEB was up
6.05 percent at 243.462 points and the Shenzhen Hong Kong
dollar-traded B-share index .SZSB rose 5.49 percent to 609.112
points. Both indexes reached 17 month highs.
 Analysts expected the current pull-back in the A share market
to be short-lived.
 "The index is being hit by profit-taking but the correction
will not be too deep," said Chen Huiqin, senior analyst at Huatai
Securities in Nanjing.
 "Data shows household savings are still shrinking, so it
appears that potential returns from the market are still
attractive for investors," she said.
 Shares of firms that produce snow-clearing products rose
after heavy snow hit many regions of China. [ID:nPEK344476]
 Changlin Co (600710.SS) advanced 3.91 percent to 6.64 yuan
while Qingdao Soda Ash Industrial (600229.SS) climbed 5.62
percent to 7.14 yuan.
 (Editing by Jonathan Hopfner)