China shares slip, Hong Kong stays at 16-month high

Thu Dec 13, 2012 12:01am EST

Related Topics

* HSI flat, H-shares +0.3 pct

* CSI300, Shanghai Comp both -0.7 pct

* CLP Holdings down after equity offering

* Foreign investors remain optimistic on China

* HK share placements on the rise after recent rally

By Vikram Subhedar

HONG KONG, Dec 13 (Reuters) - Hong Kong's Hang Seng Index was flat on Thursday amid concern over the U.S. "fiscal cliff" although locally listed Chinese shares continued to outperform onshore peers, thanks largely to foreign investor interest.

The Hang Seng stayed at 22,503.00, its highest level in 16 months, while the China Enterprises index rose 0.3 percent with financials providing the biggest boost.

In China, the CSI300 and the Shanghai Composite both eased 0.7 percent with energy and banking shares hit by mild profit-taking.

Utilities were weak in Hong Kong. led by a 3.4 percent drop for CLP Holdings after it $982 million in new shares to fund expansion.

Power Assets fell 1.7 percent.

Corporates and shareholders have taken advantage of the recent rally in Hong Kong to sell shares in the open market.

Shares of property firm Kaisa Holdings fell 5.8 percent after private equity firm Carlyle Group said it was selling up to $67 million of its stake.

A combination of global central bank easing as well as steadily improving economic data from China has spurred a revival of interest among foreign investors that seen money flow back into Hong Kong.

The territory's monetary authority intervened in the currency market again on Wednesday to defend the Hong Kong dollar's peg which has come under pressure because of the inflows.

"If there's some bad news about the fiscal cliff, then yes, you will probably see a pull back," said David Gaud, a senior portfolio manager at Edmond de Rothschild Asset Management in Hong Kong.

But he added that China is looking increasingly attractive.

"The earnings momentum is probably strengthening and for the first time in nearly two years in China we may start to get some positive surprises," said Gaud.

U.S. Federal Reserve Chairman Ben Bernanke pledged to keep interest rates low till the unemployment rates drops to 6.5 percent and extended the central bank's asset purchase programme, but reiterated that monetary policy won't be enough to offset damage from the "fiscal cliff".

Large-cap bluechips in Hong Kong underpinned the Hang Seng helping to offset the weakness in utilities.

Hong Kong Exchanges & Clearing was up 0.9 percent while Hutchison Whampoa rose 0.6 percent.

Sands China extended a run by rising 1.2 percent by the midday trading break.

On the mainland, energy firms slipped, with Petrochina down 0.5 percent and refiner Sinopec down 1 percent.

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