China shares boosted by solid holiday spending, Hong Kong strong too

Tue Oct 8, 2013 12:38am EDT

* HSI +1 pct, H-shares +1.1 pct, CSI300 +0.9 pct

* HSBC Services PMI erases early losses, more macro data looms

* ANTA Sports at month-high, Belle bounces from 2-week low

* Golden Week Macau casino revenue higher than expected

By Clement Tan

HONG KONG, Oct 8 (Reuters) - China shares were lifted on Tuesday by a private survey of services growth in the world's second-largest economy, helping erase early losses and buoying Hong Kong markets as the mainland returned from a week-long holiday.

Most Chinese property developers, retailers and the Macau casino sector were raised by strong Golden Week holiday spending, but Chinese financial A-shares were mixed ahead of a slew of official data that could start coming out later Tuesday.

At midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings was up 0.9 percent. The Shanghai Composite Index, which in July-September had its best quarter in three years, gained 0.5 percent.

The Hang Seng Index rose 1 percent to 23,196.9 points, while the China Enterprises Index of the top Chinese listings in Hong Kong climbed 1.1 percent. Both offshore indexes have been broadly flat over the past week.

"Retailers and property developers are lifted by strong holiday sales, but the A-share market still feels quite sluggish today even though this is the first time we're trading in a week," said Cao Xuefeng, a Chengdu-based analyst at Huaxi Securities.

The Markit/HSBC services PMI for September, released shortly after markets opened on Tuesday, dipped to 52.4 from August's 52.8, still well above the 50 line that separates expansion from contraction.

This compares to last week's official services PMI reading that showed the sector expanded at the fastest pace in six months in September. The divergence was starker between the official and the HSBC surveys for manufacturing activities.

Investors will be watching for third quarter GDP growth figure, due on Oct. 18. September money supply and loan growth data may kick off the latest batch of official China economic data later in the day.

Chinese financials were broadly higher in Hong Kong, but mixed in the mainland. In Shanghai, China Merchants Bank slipped 0.4 percent and China Construction Bank sank 0.9 percent.

In Hong Kong, China-focused shoe retailer Belle International jumped 3.6 percent after closing on Monday at its lowest in more than two weeks. Brokers also said luxury retail sales bettered expectations, and jewellery retailer Chow Tai Fook rose 1.6 percent.

Sports brand retailer ANTA Sports climbed 3.3 percent to its highest in a month. Home appliance giant Suning spiked 7.4 percent to its highest since March 2011 in Shenzhen.

Suning's rival Qingdao Haier Co Ltd rose 4.5 percent in Shanghai after private equity investor KKR & CO LP announced it had bought a 10 percent stake in the company just before the Golden Week holiday.

China Vanke, the largest property developer in the country by sales, gained 3.3 percent in Shenzhen. China Overseas Land rose 1.6 percent in Hong Kong.

Macau casino operator Galaxy Entertainment rose 1.5 percent. Barclays said industry table gambling revenue averaged HK$1.68 billion ($216.65 million) per day during the Golden Week holiday, up 38 percent from last year.

This is likely to lead to a record monthly showing for Macau in October, Barclays analysts wrote on Tuesday.

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