Hong Kong and China shares rise in bright end to choppy quarter

Fri Sep 28, 2012 4:48am EDT

* HSI up 0.4 pct, up 7.2 percent for third quarter

* CSI300 up 1.8 pct, Shanghai Comp up 1.5 pct

* ZTE shares jump 6.3 pct in HK on China smartphone outlook

* Chinese sportswear brands rally on UBS report (updates to close)

By Vikram Subhedar

HONG KONG, Sept 28 (Reuters) - Hong Kong shares rose on Friday to close out the third quarter with a gain of 7.2 percent as hopes that Chinese authorities will take steps to boost the slowing economy and easing by global central banks fueled a rebound in stock markets.

The Hang Seng index rose 0.4 percent to 20,840.4 points, taking its year-to-date rise to 13 percent.

In China, the CSI300 of top Shanghai and Shenzhen listed companies rose 1.8 percent. The index is still down 6.8 percent this quarter but recently clawed back some losses to be up 3.4 percent for this month.

The Shanghai Composite closed up 1.5 percent at 2,086.2 on the day but fell 6.3 percent on the quarter, taking its losses so far in 2012 to around 5 percent.

The Hong Kong benchmark was flat for the quarter at the end of August, dragged down by the slump in corporate profits in China, but rebounded on aggressive policy easing by central banks in Europe and the United States and indications that Beijing was preparing steps to support its slowing economy.

Asian markets on Friday were also underpinned by relief that Spain approved tough budget plans which pave the way for a bailout.

Traders noted that market volumes were relatively light for a quarter-end, however, as hedge funds were largely absent on the day, unwilling to add risk as much of Asia headed into a long weekend.

China markets will remain shut all of next week for the Mid-Autumn Festival. Hong Kong will be shut next Monday and Tuesday.

Speculation that Chinese authorities might step in to prop up domestic stock markets prompted a late afternoon surge on Thursday that helped lift other Asian markets.

Alan Lam, Greater China analyst at Julius Baer, said while news of regulators taking steps could not be confirmed it was unlikely that any negative policy announcement would come out before the 18th Party Congress.

China's once-in-a-decade leadership transition is expected to get underway as early as next month.

"Although renewed market concerns on European problems might drag on overall sentiment, potential recovery on the A-share market might lend some support to the Hong Kong market in the near term," Lam said in an email.

BROAD RALLY TO END THE QUARTER

Gains on the day were relatively broadbased with financials, materials and consumer stocks all recovering from this week's profit-taking.

China Shenhua Energy Co Ltd, up 2.2 percent, and Petrochina Co Ltd, up 0.7 percent, were the top boosts for the CSI300 while Chinese banks helped Hong Kong's Hang Seng the most.

ICBC rose 1.3 percent while China Construction Bank rose 0.6 percent. Hong Kong Exchanges & Clearing rose 2.4 percent.

Chinese sportswear brands were particularly strong after UBS brokerage said in a report that the sector would be among the first to emerge from the slowdown.

Shares of Anta Sports Products Ltd, the biggest player in the sector by market value, rose as much as 11.6 percent to their highest intraday level in more than three months. They closed up 9.6 percent.

Li Ning Co Ltd shares rose 6.7 percent.

Analysts at UBS said an industry-wide restructuring would address issues such as overcapacity and inadequate distribution that have hampered growth, as well as allow the companies to pay high dividends.

Telecommunication equipment maker ZTE Corp shares rose 6.3 percent to their highest level in more than two months in Hong Kong on China smartphone demand.

The company's Shenzhen listing was up 5.5 percent. (Editing by Kim Coghill) (vikram.subhedar@thomsonreuters.com; +852 28436975)

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