China shares rebound as money rates dip, property stays weak

Mon Mar 4, 2013 11:36pm EST

* HSI +0.3 pct, H-shares +0.4 pct, CSI300 +1.5 pct

* Mid-sized Chinese banks spike after money costs dip

* Chinese property sector still weak, jitters linger

* Want Want China up ahead of 2012 earnings

By Clement Tan

HONG KONG, March 5 (Reuters) - China shares rebounded from a two-month closing low on Tuesday, lifting Hong Kong markets, led by banks as concerns about policy tightening ebbed after the central bank refrained from draining funds following a sharp dip in rates in the money market.

But gains came in volumes weaker than Monday, when new curbs on the Chinese property sector had roiled markets. Strength in counters with greater earnings resilience further pointed to lingering caution.

The Hang Seng Index went into the midday trading break up 0.3 percent at 22,597.1, set for a first gain in three days. The China Enterprises Index of the top Chinese listings in Hong Kong rose 0.4 percent.

In the mainland, the CSI300 of the leading Shanghai and Shenzhen A-share listings climbed 1.5 percent after suffering on Monday its heaviest loss in more than two years. The Shanghai Composite Index was up 1.1 percent.

"There's a defensive undertone to the rebound today," said Wang Aochao, UOB-Kay Hian's Shanghai-based head of research. "People are still selling off the property sector and have little appetite for uncertainty."

The Chinese property sector stayed on the defensive after Monday's steep losses as outgoing Premier Wen Jiabao reiterated Beijing's commitment to curbing speculative demand in the housing market at the National People's Congress.

China Vanke shed 1.7 percent in Shenzhen, while Poly Real Estate plumbed a three-month low, diving 3 percent to bring losses on the year to almost 19 percent.

In Hong Kong, China Resources Land (CR Land) followed Monday's nearly 9 percent loss with another 3.7 percent slide. CR Land is now trading at its lowest since late November after tumbling 18 percent from a Jan. 30 peak.

"We are at the start of a tightening cycle which will make it hard for the property sector to outperform," Matthew Sutherland, Fidelity Worldwide Investment's senior investor director for equities, said in a note after markets closed on Monday.

"Where we have holdings in the sector, these tend to be focused on quality defensive names and stocks with higher exposure to lower tier cities, where the impact may be more muted," he added.

CHINA TIGHTENING FEARS OVERDONE?

Chinese banks led benchmark indexes higher in both on- and offshore markets after China's benchmark seven-day repo rate dipped 110 basis points early on Tuesday, pointing to an improvement in money supply conditions in the mainland.

This comes as Premier Wen announced China's 2013 economic growth target at 7.5 percent, a level similar to 2012, and consumer inflation at 3.5 percent, compared with 2012's 4 percent.

Mid-sized Ping An Bank surged 8 percent to a record high in Shenzhen, while Minsheng Bank climbed 3.9 percent in Shanghai and 1.9 percent in Hong Kong.

In Shanghai, Industrial Bank spiked 5.3 percent while Bank of Beijing Co Ltd jumped 2.6 percent after they were both approved as fund managers by the China Banking Regulatory Commission late on Monday.

Chongqing Brewery jumped by the maximum 10 percent in Shanghai after Carlsberg launched a partial take-over bid worth 2.65 billion Danish crowns ($461.49 million) for 30.31 percent of its shares.

Want Want China rose 2.4 percent ahead of its 2012 full year earnings. Up more than 6 percent in 2013, it is trading at a 20 percent premium to its 12-month forward earnings multiple, according to Thomson Reuters StarMine.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.