Hong Kong, China shares extend rebound, cash injection soothes

Mon Dec 23, 2013 11:46pm EST

* HSI +1.1 pct, H-shares +1.8 pct, CSI300 +0.9 pct

* HK market shut from noon for Christmas, reopens on Friday

* Chinese financials buoyed by PBOC's 1st reverse repo in 3 weeks

* China Telecom, Unicom buoyed by lower interconnection rates

* FIH Mobile in biggest gain in 7 mths after positive profit alert

By Clement Tan

HONG KONG, Dec 24 (Reuters) - Hong Kong and China shares extended a rebound from multi-week lows on Tuesday, with the first central bank liquidity injection through normal channels in three weeks providing some respite from a year-end interbank cash crunch in the mainland.

Financial companies led gains after the People's Bank of China on Tuesday morning added 29 billion yuan ($4.8 billion) in short-term cash into the banking system through seven-day reverse repos, after it had suspended such injections since Dec. 3.

China's benchmark money market rate, the seven-day bond repurchase rate, traded down from Monday's 8.9 percent close, which was the highest since end-June. At midday, it was trading at about 6.6 percent.

"The relief is quite palpable after the cash injection by the PBOC today," said Jackson Wong, Tanrich Securities vice-president for equity sales. "But everything is now very short term, we are at quarter-end and funding needs are high."

By midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings was up 0.9 percent, while the Shanghai Composite Index rose 0.7 percent. Both had closed last Friday at their lowest since August.

The Hang Seng Index rose 1.1 percent to 23,179.6 points, while the China Enterprises Index of the top offshore Chinese listings in Hong Kong climbed 1.8 percent. Both had closed on Friday at their lowest since mid-November.

Hong Kong markets are shut from noon on Tuesday for Christmas and will resume trading on Friday. Mainland China's markets are open through the week.

On Tuesday, the Chinese non-banking sectors provided key support. Ping An Insurance , China's second-largest insurer, climbed 1.5 percent in Shanghai and 2.5 percent in Hong Kong.

Among the banks, Bank of China climbed 2.3 percent in Hong Kong after closing on Monday at its lowest since Nov. 14. On the year, it is up 3.5 percent, compared with a 2.3 percent rise for the Hang Seng Index and 5.3 percent slide for the H-share index.

The official China Securities Journal reported on Tuesday that money rates were likely to remain at elevated levels until the Lunar New Year at end-January, urging the central bank to step up its communication with the market.

TECHNOLOGY MATTERS

FIH Mobile soared 9.7 percent in its biggest one-day gain in almost seven months after issuing a positive profit alert, expecting to record a net profit for the year ending Dec. 31. Its Hong Kong shares are now up 14.4 percent in 2013.

BlackBerry announced a deal with FIH last Friday that will see the Taiwanese firm design and market phones starting in Indonesia, representing its biggest step up the value chain beyond smartphone assembly.

China Unicom rose 1.7 percent, while China Telecom rose 1.8 percent on lower fees they will have to pay for connecting to the network of dominant mobile operator China Mobile.

China Mobile said late on Monday the Ministry of Industry and Information Technology had notified the company of a revision to public telecommunication network interconnection settlement fees starting Jan. 1, 2014.

China Mobile underperformed its small rivals, rising 0.5 percent. It will start taking Apple Inc iPhone pre-orders on Christmas Day and that will be available from Jan. 17. Apple's shares jumped nearly 4 percent on Monday, spurring gains for its suppliers on Tuesday.

Goertek jumped 4 percent in Shenzhen and is now up nearly 72 percent on the year, compared with the 8.7 percent slide for the CSI300. AAC Technology spiked 4.2 percent to its highest close since Sept. 25 in Hong Kong.

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