China shares outshine Asia with best day in a week, Hong Kong pares gains

Fri May 3, 2013 4:40am EDT

* HSI +0.1 pct, H-shares +0.2 pct, CSI300 +1.8 pct

* Brokers, mid-sized banks lead A-share index gains

* Hotel IPO spin-off lifts New World Development

* BYD up on reported renewable-energy car subsidies

By Clement Tan and Yimou Lee

HONG KONG, May 3 (Reuters) - China shares produced their best day in more than a week on Friday, supporting the Hong Kong market, as investors cheered official news reports that pointed to greater foreign investment in mainland markets.

The official Shanghai Securities News reported on Friday that new technical regulations rolled out by the Chinese central bank suggest that renminbi qualified foreign institutional investors (RQFII) quota approvals may be resumed after a two-month suspension.

The CSI300 of the leading Shanghai and Shenzhen A-share listings closed up 1.8 percent, while the Shanghai Composite Index rose 1.4 percent.

It was the best day since April 24 for both indexes, which rose 1.9 percent and 1.3 percent, respectively, on the week.

Gains on Friday helped the Shanghai benchmark decisively bounce above its 200-day moving average after closing below this technical level on Thursday for the first time since Christmas Eve.

The Hang Seng Index inched up 0.1 percent, paring earlier gains after testing its highest since March 13. The China Enterprises Index of the top Chinese listings in Hong Kong gained 0.2 percent. The indexes rose 0.6 percent and 0.1 percent on the week, respectively.

Turnover in Hong Kong faded after midday and totalled just $7.2 billion, just below its average in the last 20 days. Shanghai volume was at its highest since last Friday and was almost 10 percent better than average.

"People are anticipating about 200 billion yuan of unused RQFII quota could be deployed," said Jackson Wong, Tanrich Securities' vice-president for equity sales.

CITIC Securities , China's largest listed brokerage, climbed 3 percent to its highest close since March 25 in Shanghai and 2.8 percent in Hong Kong. Its biggest rival, Haitong Securities, jumped 4 percent in Shanghai and 2 percent in Hong Kong.

The People's Bank of China said that custodial institutions have five working days, up from the current one-day arrangment, to report transactional information relating to RQFII investments. The central bank also said that the RQFIIs should open offshore RMB deposit accounts, the Securities Daily reported.

Mid-sized Chinese banks and financial were the biggest boosts to onshore indexes. In Shanghai, China Minsheng Bank rose 2.3 percent, while insurer Ping An Insurance rose 2.7 percent.

Hong Kong developer New World Development jumped 3.3 percent after announcing plans to spin off its hotel properties in an initial public offering.

POLICY BOOSTERS

Beijing will release a slew of April economic data next week, starting with trade data on Wednesday and inflation on Thursday, with money supply and loan growth expected between May 10-15.

The data could offer more clues on the likelihood of an earnings recovery after purchasing manager index (PMI) data this week offered more evidence that the pace of China's economic recovery is slowing despite a boom in credit supply earlier this year.

Some 67 percent of the 138 China-listed companies that have reported first-quarter earnings missed expectations, according to Thomson Reuters StarMine. Ÿ

Warren Buffett-backed Chinese automaker BYD Co Ltd climbed 3.6 percent in Hong Kong and 6.5 percent in Shenzhen after the official Shanghai Securities News reported that Beijing might issue subsidies for renewable-energy cars in the first half of this year.

Power equipment makers Dongfang Electric Corp rose 5.5 percent, while Shanghai Electric Group Co jumped 4.4 percent, both helped by an upgrade by Deutsche Bank.

"The first quarter of 2013 is the worst quarter in terms of year-on-year earnings comparison. We expect earnings in the subsequent quarters to return to a positive trend," DB analysts said in a note dated May 2.

The National Development and Reform Commission and several ministries will release their urbanisation development plan for 2012-2020 before the end of June, with implementation guidance expected in the second half this year, the Shanghai Securities News reported on Friday.

China State Construction gained 3.2 percent in Shanghai and 3 percent in Hong Kong.