Hong Kong, China shares pare gains after dismal China trade data

Tue Jul 9, 2013 11:49pm EDT

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By Clement Tan

HONG KONG, July 10 (Reuters) - Hong Kong and China shares pared gains on Wednesday after Chinese data showed exports fell for the first time in 17 months in June, stoking fears that second quarter growth will disappoint.

Commodities and export-related counters underperformed as investors braced for monthly money supply and loan growth, due by July 15. Second quarter GDP is due on Monday, as are monthly urban investment, industrial output and retail sales figures.

While June data met expectations for a $27.1 billion trade surplus, imports dipped 0.7 percent, versus an expected 8 percent growth, while exports dropped 3.1 percent, far below a projection for 4 percent growth.

At 0335 GMT, the Hang Seng Index was up 0.4 percent at 20,730.8, as early gains of almost 2 percent were pared. The China Enterprises Index of the top Chinese listings in Hong Kong rose 0.5 percent.

The CSI300 of the leading Shanghai and Shenzhen A-share listings inched up 0.3 percent, while the Shanghai Composite Index was up 0.4 percent. They have each tumbled nearly 20 percent from end-May highs.

"The trade data is a negative, no question about that. But it's also no real shocker," said Larry Jiang, chief strategist at Guotai Junan International Securities. "It's not that the Chinese economy lacks money, it's about efficient allocation and the money supply data will hopefully offer some clues."

"At this point, it is very difficult to persuade people to return to the market. Investors will be prepared to pay a premium for shares of companies that demonstrate earnings that are more immune to the cyclical winds in China," Jiang added.

Shares of China Rongsheng, the country's largest private shipbuilder, tumbled almost 5 percent to another record low. Port terminal operator Cosco Pacific fell 3 percent in Hong Kong.

Coal counters reversed early gains in Hong Kong, with China Shenhua Energy and China Coal each down 0.8 percent. Jiangxi Copper dived nearly 5 percent in Hong Kong.

Shares of Chow Tai Fook jumped 9 percent after the jewellery retailer posted a 63 percent rise in first-quarter revenue from a year earlier, mainly due to a surge in gold products sales following a sharp fall in gold prices.

The Hong Kong property and Macau gambling sectors were also mostly stronger as investors rotated out of China beta sectors, with Asia insurance giant AIA Group again strong, up more than 1 percent. New World Development was up 2 percent, while Sands CHina climbed 3.4 percent.

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