Hong Kong, China shares edge up; mainland consumer stocks gain

Fri Aug 12, 2011 5:44am EDT

(Updates to close)

* Hang Seng up 0.1 pct on day, slumps 6.3 pct on week

* Shanghai Composite up 0.5 pct, down 1.2 pct on week

* Domestic consumption names gain at global cyclicals' expense

* HK turnover in past fortnight spikes to highest since Nov. 2010

By Clement Tan and Vikram Subhedar

HONG KONG, Aug 12 (Reuters) - Hong Kong shares edged up on Friday as investors bought mainland consumer-related stocks to hedge against the prospect of slowing global growth after intense volatility knocked the benchmark Hang Seng index down 6 percent for a second straight week.

Stocks have been pummelled globally on U.S. growth concerns and an unresolved European debt crisis during a frantic week that even saw the Hong Kong exchange regulator beset by a technical glitch -- it had to suspend trading in eight stocks on Wednesday after its news Web site was hacked.

For the overall market, "we've probably seen the worst in the last two weeks, but this day-to-day volatility should go on until the end of August," said Banny Lam, a macro-strategist with CCB International in Hong Kong.

"Systemic risk can hit a lot of sectors, but even if the U.S. and Europe do badly, it won't have an impact on China consumption," he added.

The Hang Seng Index edged up 0.1 percent on the day to 19,620.0 points, but slumped to its worst fortnight loss since Jan. 2009 and turnover over the last two weeks surged to its highest since last November.

Amid jitters, investors this week moved from global cyclical names to domestic consumer names such as Hengan International Group Co , the mainland's largest maker of sanitary napkins and a June addition to the Hang Seng.

It gained for the fifth-straight session, ending up more than 5 percent for the week. By comparison, PetroChina Co Ltd lost more than 9 percent this week.

In a client note on Thursday, Julius Baer advised that the mainland market was likely to outperform Hong Kong, given that the territory is expected to see higher volatility compared with Asian peers because of the local currency's dollar peg.

ALCOHOL MAKERS SUPPORT SHANGHAI

In Shanghai, the same domestic theme was also evident. Kweichow Moutai Co Ltd and Shanxi Fenjiu , two of the more recognisable alcohol names on the mainland were among the biggest supports to the benchmark.

The Shanghai Composite Index closed up 0.5 percent on the day to 2,593.2 points, rounding off the week down 1.3 percent, its fourth straight weekly loss but relatively outperforming Hong Kong and other Asian peers.

Alcohol producer stocks are classified a consumer staple by the Shanghai bourse. Kweichow, a Chinese state-owned enterprise that produces the premium Maotai liquor, gained almost 1 percent on Friday in good volumes, while Shanxi Fenjiu gained almost 4 percent.

Large caps sensitive to inflation and growth figures continued to see good gains and interest from investors. Oil giants, PetroChina Co Ltd was the top support.

Reports on Friday that China's insurance sector had invested 10 billion yuan in the mainland stock markets further boostingd sentiment that was already assuaged this week after China's pension fund moved to stabilise the market with a 5 billion yuan investment. (Editing by Richard Borsuk)

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