Hong Kong, China shares rebound from multi-week lows, Chalco climbs

Wed Nov 14, 2012 4:08am EST

(Updates to close)

* HSI +1.2 pct, H-shares +1.7 pct, CSI300 +0.5 pct

* Metal plays buoyed by report of Beijing stockpile resumption

* Shanghai volume at 2-1/2-mth low, HK turnover 15 pct below average

* Next Media suspended after slumping 13 pct in early trade

By Clement Tan

HONG KONG, Nov 14 (Reuters) - Hong Kong shares recovered from a one-month low on Wednesday, led by metal producers after Chinese state media confirmed an earlier Reuters report that Beijing had resumed stockpiling metals in a move seen supporting physical prices.

Reuters had first reported on Monday that China's State Reserves Bureau issued tenders to buy 160,000 tonnes of primary aluminium and 150,000 tonnes of zinc ingots from local smelters. On Wednesday, sources told Reuters that these tenders had been delayed to Thursday.

The Hang Seng Index rose 1.2 percent, while the China Enterprises Index of the top Chinese listings in Hong Kong rose 1.7 percent. Wednesday's gains helped both indexes recover most of Tuesday's losses that prodded them to a one-month closing low.

In the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings rose 0.5 percent, while the Shanghai Composite Index firmed 0.4 percent. Both onshore China indexes had closed on Tuesday at a seven-week low.

But gains in Shanghai came on the lowest bourse volume since Aug. 31. Hong Kong turnover declined 7 percent from Tuesday and was some 15 percent below its average over the last 30 days.

"In this environment where there's so much uncertainty over the U.S. fiscal situation, these sectors offer some certainty because of government investment right now," said Jackson Wong, Tanrich Securities' vice-president for equity sales.

A vote before the 18th Communist Party congress ended earlier on Wednesday that sent the 10 leading candidates for the Politburo Standing Committee into the Central Committee, also further soothed jitters, Wong added.

The full Politburo Standing Committee lineup is expected to be announced at 0300 GMT on Thursday.

On Wednesday, shares of Aluminum Corporation of China (Chalco), the country's largest aluminum producer, led gains among components on the Hang Seng and CSI300 indexes, jumping 4.7 percent in Shanghai and 2.8 percent in Hong Kong.

Wong said there were a "fair amount" of investors rotating into metal counters, such as Chalco, after the recent spate of profit taking.

Before Wednesday, Chalco was down 8.5 percent from a Nov. 7 high in Hong Kong. It is still down 1.8 percent on the year, set for a third-straight annual loss. In 2012, the Hang Seng Index is up 16 percent while the China Enterprises Index is up 5 percent.

Chinese steel counters also rebounded following Tuesday's losses. Angang Steel rose 3.8 percent in Hong Kong and 0.6 percent in Shenzhen.

But in a sign that things are still to come, the China Iron & Steel Association (CISA) warned on Wednesday that overcapacity will continue to eat into margins despite falling inventories and a recent rally in steel prices in China.

In Hong Kong, Chinese banks were also stronger. China Construction Bank led gains among its "Big Four" Chinese bank rivals, rising 3.2 percent.

But short interest stayed elevated for CCB shares, accounting for 13.9 percent of its turnover on Wednesday, compared to 7.8 percent for the broader Hong Kong market -- consistent with most of November.

TENCENT MAY FACE PRESSURE

Tencent Holdings slipped 0.9 percent in Hong Kong, trimming 2012 gains to 71.6 percent, partly put on the defensive after sector rival Nasdaq-listed Baidu di ved nearly 6 percent overnight.

After markets closed on Wednesday, the Chinese Internet giant posted 3.2 billion yuan in third-quarter net profit, below a 3.5 billion yuan Reuters consensus forecast, suggesting its shares could come under further pressure on Thursday.

Tencent is currently trading at 25 times forward 12-month earnings, an 8 percent discount to its historical median, according to Thomson Reuters StarMine.

Shares of Next Media were halted in early trading after slumping 13 percent to its lowest in a month in Hong Kong.

Taiwanese media reported that the country's financial regulator had demanded businessman Jeffrey Koo not take control of Next Media's Taiwan assets as part of a deal agreed last month as it does not want financial industry executives to control or run media. (Editing by Jacqueline Wong)