Hong Kong shares inch higher in tepid trade, China weak again

Wed Aug 29, 2012 1:14am EDT

(Updates to midday)

* HSI up 0.1 pct, CSI300 slips 0.5 pct

* Want Want fell 2.9 pct before reporting H1 results

* China Life Insurance firmer after encouraging earnings

* Galaxy Entertainment strong after Premira stake sale

By Clement Tan

HONG KONG, Aug 29 (Reuters) - Hong Kong shares inched higher on Wednesday, helped by a 3 percent jump for China Life Insurance after its first half net profit was slightly above the company's guidance.

With turnover lackluster ahead of an annual meeting of central bankers on Friday in Wyoming, hosted by Federal Reserve Chairman Ben Bernanke, investors focused on the earnings of specific companies.

Mainland Chinese markets were weaker, plumbing 3-1/2 year intra-day lows recorded on Tuesday, with investors shrugging off an official media report that Beijing could buy more Chinese bank shares to boost sentiment.

The Shanghai Composite Index and the CSI300 of the top Shanghai and Shenzhen listings each fell 0.5 percent at midday. The China Enterprises Index of the top Chinese listings in Hong Kong edged up 0.1 percent.

The Hang Seng Index rose 0.1 percent to 19,832.6, bouncing off its 200-day moving average now at 19,766.2, a technical level it has closed above for all but one session in almost a month.

"Everybody's waiting, but I think Bernanke and the other central bankers are limited in what they can do to boost growth," said Wang Ao-chao, UOB Kay Hian's Shanghai-based head of research.

"It's difficult to see any earnings improvement since the things are not getting better in the Chinese economy. Beijing will eventually do something, but it may not be in time for a recovery by year's end," Wang added.

Ahead of its first half corporate earnings, Chinese rice cracker maker Want Want China dropped 2.9 percent. It is still up 27 percent in 2012, compared with the 7.6 percent gain on the Hang Seng Index.

At the midday break, Want Want posted a better-than-expected 38.2 percent increase in first half net profit.

China Life Insurance rose after reporting late on Tuesday a smaller-than-expected 20 percent decline in first half net profit. Earnings were hurt by a sluggish stock market in the mainland, where the company is allowed to invest up to 20 percent of its assets.

Barclays analysts said the mainland's largest insurer had earlier warned of a 29 percent decline in profit.

At a press briefing at midday on Wednesday, China Life's chairman said the company does not see promising prospects of improving investment yields this year.

The South China Morning Post reported on Wednesday that China Life is aiming to increase its stake in China Guangfa Bank. The company's chairman told the press briefing the company's plans were not finalized.

At midday, Hong Kong turnover rose marginally from Tuesday, but that was mainly due to European private equity firm Permira's $750 million stake sale in Macau casino operator Galaxy Entertainment.

Galaxy jumped 3.9 percent to HK$22.75, above the HK$21 price per share at which Premira sold 278.8 million shares at a 4 percent discount to Monday's closing. (Additional reporting by Vikram Subhedar and Clare Baldwin; Editing by Richard Borsuk)

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