Hong Kong, China shares weaker, China GDP data in focus

Mon Jan 16, 2012 12:09am EST

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(Updates to midday)

* HSI down 1 pct, Shanghai Composite down 0.6 pct

* Last week's outperformers lead losses

* China oil majors weaker on lower oil prices

* Shanghai below technical support

By Clement Tan

HONG KONG, Jan 16 (Reuters) - Hong Kong and China shares started the week weaker on Monday but mildly outperforming Asian peers as investors took profit on last week's outperformers ahead of more economic data from China expected on Tuesday.

China is expected to post fourth-quarter GDP growth of 8.7 percent on Tuesday, according to a Reuters poll. Beijing will also release December industrial output, investment and retail sales figures, which could spur market gains.

"We are waiting for China GDP data tomorrow for fresh direction. If it comes in lower than expected, it's going to boost hopes of easing, but any lift from that is likely to be short term," said Jackson Wong, Tanrich Securities' vice-president of equity sales.

The Shanghai Composite Index was down 0.56 percent at 2,231.98 at midday, while the China Enterprises Index of top mainland listings in Hong Kong had shed 1.27 percent after gaining 6.5 percent last week.

Hong Kong's Hang Seng Index was down 0.95 percent at 19,021.85, with technical support seen at 18,858, the level at which it closed on Jan. 9 before the jump last week.

PetroChina Co Ltd, which closed at the highest since early August in Hong Kong on Friday, was among the top drags on the Hang Seng Index, down 2 percent at HK$10.76. Support is expected at around HK$10.70, the bottom of a range it has traded in for the last four sessions.

Its peers were also weaker. CNOOC Ltd declined 1.2 percent, while China Petroleum & Chemical Corp (Sinopec) was down 1.8 percent.

Commodities prices, including oil and gold, also weighed on fears that mass sovereign debt rating cuts by Standard & Poor's could further aggravate euro zone funding difficulties and further impede global growth.

All three Chinese oil majors were key drivers of the Hang Seng Index's strong start to the year, largely on the back of rising oil prices from rising tensions on oil supply associated with Iran sanctions.

Bucking losses on the day, Warren Buffett-backed Chinese automaker BYD Co Ltd gained 2.2 percent to the highest since Nov. 15 in midday volume that exceeded twice its 30-day average.

BYD is poised to rise for a sixth straight session, with investors pouring back into the stock in anticipation it could benefit from a new policy supporting production of environmentally-friendly cars, analysts said.

SHANGHAI BREAKS BELOW SUPPORT, TURNOVER SLUMPS

In Shanghai, the benchmark broke below chart support seen at around 2,241 points, the level seen on Dec. 14 before losses accelerated.

The growth-sensitive materials sector was a standout underperformer, with the Shanghai materials sub-index down 1.3 percent. Inner Mongolia Baotou Steel Rare Earth (Group) Hi-Tech Co Ltd (Baotou Steel) was a top drag.

Baotou Steel lost 4.6 percent, paring last week's gains after it ended Friday at the highest in more than a month, boosted by hopes of policy easing after the first few batches of economic data last week.

Kweichow Moutai Co Ltd slipped 3.1 percent, leading a slew of top liquor brands that have been standout outperformers in the last two years while the Shanghai Composite slumped 33 percent.

Midday A-share turnover on the Shanghai bourse was the lowest in a week, nearing a three-year low. Tight money supply, owing partly to Beijing's tight monetary policy to contain inflation, is partly to blame. That has in turn made it difficult for companies to raise funds in the mainland, especially small and medium-sized enterprises.

On Monday, the China securities regulator told the Asian Financial Forum in Hong Kong that there were plans to relax controls on overseas listings for Chinese companies, while pushing for an expansion of yuan-denominated shares in the offshore yuan market in the territory. (Editing by Chris Lewis)

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