China shares underperform Asia, weigh on Hong Kong

Wed Jul 17, 2013 11:46pm EDT

Related Topics

* HSI -0.1 pct, H-shares flat, CSI300 -0.9 pct

* Real estate developers' access to financing in spotlight

* Financials, property shares turn weaker

* Shamshui, BBMG dive after profit warning

By Clement Tan

HONG KONG, July 18 (Reuters) - China shares underperformed Asia in mid-morning trade on Thursday, weighing on Hong Kong markets, with the financial and property sectors hit by concerns over the availability of financing for real estate developers.

The pace of China's monthly home price increase slowed for a third straight month in June though the year-on-year gain was the strongest this year, underlining the challenges facing Beijing's near four-year-old campaign to tame housing inflation.

By 0313 GMT, the CSI300 of the leading Shanghai and Shenzhen A-share listings was down 0.9 percent, while the Shanghai Composite Index slid 0.6 percent. Both broke below chart support that held for a week, pointing to more losses in the near term.

The Hang Seng Index slipped 0.1 percent, with the China Enterprises Index of the top Chinese listings in Hong Kong also flat. Bourse turnover in Hong Kong stayed weak.

"It's not just property-specific anymore," said Lee Wee Liat, BNP Paribas head of Asia property. "Fears are growing that the liquidity shock a few weeks ago may be starting to trickle into the sector."

The official China Securities Journal reported on Thursday that financing requirements for listed property developers will be gradually liberalised and loosened, subject to conditions. This follows a similar Xinhua news report on Wednesday.

BNP's Lee added that mainland media reports alleging inappropriate corporate behavior by state-owned conglomerates have raised concerns how that may potentially affect state-owned real estate developers.

Shares of China Vanke, the country's largest real estate developer by sales, declined 1.6 percent in Shenzhen. In Hong Kong, China Overseas Land and China Resources Land each fell nearly 2 percent.

Mid-sized lenders China Minsheng Bank and China Merchants Bank skidded 2.9 and 1.8 percent, respectively in Shanghai. Their Hong Kong-listed shares also suffered losses on the day.

Cement producers China Shanshui and BBMG Corp tanked after they warned of declining profits late on Wednesday, pointing to a likely divergence at their upcoming interim earnings reports due in August. Three other cement producers had issued positive profit alerts last week.

On Thursday, Shanshui slumped nearly 10 percent, nearing its June 25 low, which was also its lowest since April 2009. BBMG lost 1.9 percent, while sector giant Anhui Conch Cement slid 2.1 percent in Hong Kong.

But there were gains for China Resources Power, rising 2.3 percent after the company said on its website that it considers recent media reports alleging corruption in the company to be defamatory and that it had adversely affected the reputation of its leadership.

FILED UNDER: