Hong Kong shares hit three-week high, China creeps higher

Thu Apr 25, 2013 12:51am EDT

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By Clement Tan

HONG KONG, April 25 (Reuters) - Hong Kong shares climbed to their highest in three weeks on Thursday, spurred by recovering commodity prices and positive quarterly earnings from China Minsheng Bank, the country's seventh-largest lender.

At midday, the Hang Seng Index was up 1.1 percent at 22,429.6 points, while the China Enterprises Index of the leading Chinese listings in Hong Kong rose 1.4 percent. Both were at their highest since April 3.

The Shanghai Composite Index and the CSI300 of the leading Shanghai and Shenzhen A-share listings were each up 0.2 percent.

"Minsheng's first quarter earnings were pretty solid, but much of its gains in Hong Kong today is down to short covering," said Jackson Wong, Tanrich Securities' vice-president of equity sales.

Short selling interest in Minsheng Bank's H-share listing averaged 26 percent in the first three days of the week, way above the 9.8 percent average for the broader Hong Kong market.

On Thursday, Minsheng's Hong Kong shares jumped 3.2 percent to its highest since March 28 after China's seventh-largest listed bank posted a 20 percent rise in first quarter net profit from a year earlier.

But its Shanghai listing fell 1 percent, tracking losses in the Chinese banking sector on the mainland after regulators ordered banks to report suspicious or irregular fixed-income transactions as part of a clampdown on the country's vast interbank market.

The People's Bank of China, which regulates the 24.4 trillion yuan ($4 trillion) interbank bond market, told commercial banks at a closed-door meeting on Wednesday that it was preparing tougher regulation to deal with substitute holdings.

Haitong Securities jumped 3.7 percent in Hong Kong and 1.9 percent in Shanghai after also posting favourable results.

China Pacific Insurance rose 1.7 percent in Hong Kong and 0.2 percent in Shanghai after reporting a 241 percent surge in first quarter net profit from a year earlier.

Bank of China , the first of the "Big Four" Chinese banks to post quarterly earnings later in the day along with a clutch of bellwether Chinese companies, inched up 0.2 percent in Hong Kong and was flat in Shanghai.

COMMODS REBOUND AIDS STOCKS

Commodities-related stocks were also broadly higher as gold prices rose to their highest in a week following a recent plunge in bullion markets. Zijin Mining , China's biggest gold miner, jumped 5.3 percent in Hong Kong and 0.6 percent in Shanghai.

Jiangxi Copper spiked 4.4 percent in Hong Kong and a more modest 0.6 percent in Shanghai, also helped by an upgrade by UBS from "hold" to "buy" with analysts believing its share price after the recent selloff, now represents an attractive risk-reward profile.

Chinese property developers listed on the mainland were among the biggest index drags after the China Business News reported that the banking regulator has instructed lenders to stop extending loans to developers guilty of "malpractices".

This comes after data from the central bank showed China's outstanding real estate loans in the first quarter rose 16.4 percent from the same period a year ago, even as overall industrial lending slowed.

Poly Real Estate shed 2.3 percent in Shanghai, while China Vanke declined 1.2 percent in Shenzhen.

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