Hong Kong shares edge higher, alcohol sector weakness drags China lower

Mon Dec 3, 2012 12:26am EST

* HSI +0.1 pct, H-shares -0.2 pct, CSI300 -0.4 pct

* Chinese alcohol sector weak after distributor bad earnings

* Wharf Holdings nears highest in three years

* Chinese insurers, property counters buck A-share weakness

By Clement Tan

HONG KONG, Dec 3 (Reuters) - Onshore Chinese shares eased on Monday despite positive economic data, crimping Hong Kong gains as investors took profits on outperformers, with the mainland banking and alcohol sectors among the biggest index drags.

Surveys showing the world's second-largest economy quickened for the first time in 13 months in November failed to ignite markets after investors had cheered comments from China's vice-premier last Friday on the key role urbanization will play in the country's development.

The Hang Seng Index went into the midday trading break up 0.1 percent at 22,060.8, after earlier testing a new intra-day 2012 high at 22,162.5. The China Enterprises Index of the top Chinese listings in Hong Kong slipped 0.2 percent.

In the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings fell 0.4 percent, while the Shanghai Composite Index declined 0.3 percent.

"It's looking pretty quiet today. There's a fair amount of profit taking going on after last Friday's gains," said Jackson Wong, Tanrich Securities' vice-president for equity sales.

On Monday, Wharf Holdings climbed 2.8 percent to near its highest in nearly three years, leading strength among Hong Kong developers. It is now up 75 percent on the year, compared with the Hang Seng Index's 20 percent rise.

Chinese alcohol producers once again suffered stiff losses after Silver Base, a premium alcohol distributor in the mainland, fell 4.5 percent in Hong Kong after posting an 85 percent fall in revenue in the six months to end-September.

It has lost 12.5 percent since it warned of a profit loss on Nov. 20 and is languishing at its lowest in more than two years.

Sector heavyweights Kweichow Moutai and Wuliangye extended their November downward spiral, diving 5.3 and 5.8 percent respectively.

The sector has been plummelled by a contamination scare involving Jiugui Liquor and anti-corruption rhetoric by top leaders as they gathered at the 18th Communist Party Congress for China's once-in-a-decade political transition.

Chinese banking shares in the mainland were also weak after Huaxia Bank blamed a Shanghai branch employee for selling a wealth management product without permission, which local media reported could not repay investors.

Huaxia shed 3.7 percent and was among the most actively traded stocks among CSI300 components. Its weakness hurt its sector rivals, with Bank of Communications down 1 percent.

Traders at a top Chinese brokerage said funds are rotating from the mainland banking sector into insurers and property developers after the positive survey readings over the weekend.

Chinese insurers were broadly stronger after a top official at the country's securities regulator reiterated the body's commitment to broaden investment channels for social security and insurance funds.

China Life Insurance rose 1.7 percent in Shanghai and 0.2 percent in Hong Kong. Ping An Insurance rose 1.3 percent in Shanghai and 0.3 percent in Hong Kong.

Chinese property stocks were standout performers in the A-share market, with Poly Real Estate rising 3.5 percent, while China Vanke gained 2.1 percent.

But the sector, along with the railway and infrastructure-related counters that rallied on Friday, was broadly weaker in Hong Kong.

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