Hong Kong shares end flat as StanChart rebounds, China edges up

Wed Aug 8, 2012 5:05am EDT

(Updates to close)

* HSI down 0.04 pct, CSI300 flat

* Cathay Pacific down after H1 earnings underwhelm

* Esprit trims Tuesday's strong gains, new business plan awaited

* MGM China jumps after H1 earnings surprise

By Clement Tan

HONG KONG, Aug 8 (Reuters) - Hong Kong shares ended flat on Wednesday holding close to a three-month high, as investors took profits ahead of a slew of Chinese economic data, while Standard Chartered recovered fully from early losses made in the wake of allegations of money laundering related to Iran.

The Hang Seng Index finished down 0.04 percent at 20,065.5, after finding support at Monday's lows at around 19,978. Overall Hong Kong turnover declined 11 percent from Tuesday.

Standard Chartered finished up 0.8 percent after opening down more than 3 percent. It had suffered its worst ever single day loss in Hong Kong on Tuesday when it dropped 14.9 percent after the New York state banking regulator launched an explosive attack on the bank's alleged money laundering transactions tied to Iran.

On Wednesday, it emerged that the U.S. Treasury Department and Federal Reserve were blindsided and angered by that New York regulator's move, sources familiar with the situation told Reuters.

Cathay Pacific Airways lost 4.3 percent in heavy volumes, with losses accelerating in the afternoon after the company posted its worst first-half loss since 2003 at the midday trading break.

Esprit Holdings dived 12.2 percent, trimming its 28 percent surge on Tuesday, as investors await more details on a plan by its new chief to revive the struggling Europe-focused retailer.

Some of the bigger gainers earlier this week were some of the biggest drags on the benchmark index on Wednesday. Want Want China shed 3.7 percent after rising 2.5 percent in the two days prior.

Mainland Chinese markets were largely flat. The CSI300 Index of the top Shanghai and Shenzhen listings finished flat, but the Shanghai Composite Index closed up 0.2 percent at its highest since July 20.

"People have been trying to ride the bounce up this week, but are taking some profits now that we are running into some technical resistance," said Hong Hao, chief strategist at Bank of Communications International Securities.

"Moving ahead, I am still sticking to my defensive call. Earnings are going to disappoint, and data tomorrow will show the Chinese economy is still weak," Hong added.

Beijing is expected to release a slew of July economic data from Thursday, starting with inflation, urban investment, industrial output and retail sales. Analysts expect the data to show a shallow recovery in the world's second-largest economy.

EARNINGS IN FOCUS

MGM China jumped 5.3 percent after posting better-than-expected second-quarter results after markets closed on Tuesday.

It is now up more than 20 percent for the year to date. Before Wednesday, it was trading at 9.8 times forward 12-month earnings, a 12 percent discount to its historical median, according to Thomson Reuters StarMine.

In contrast, investors punished Cathay Pacific, the world's largest freight carrier, for posting a net loss of HK$935 million ($120.6 million) for the six months that ended in June.

This lagged an average forecast of a HK$122.5 million profit from six analysts polled by Reuters and compared with a profit of HK$2.81 billion ($359.9 million) for the same period last year.

Prior to the earnings announcement, five out of 21 analysts downgraded their earnings estimates for Cathay Pacific by an average of 18.8 percent in the last 30 days, according to Thomson Reuters StarMine.

Hong Kong's dominant airline now stands 7.2 percent down for the year so far, compared to a gain of 8.8 percent for the Hang Seng Index. (Editing by Simon Cameron-Moore)

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