Hong Kong, China shares slip ahead of official PMI, parliamentary meetings

Thu Feb 27, 2014 11:43pm EST

* HSI -0.3 pct, H-shares -0.8 pct, CSI300 -0.6 pct

* HK indexes headed for 1st monthly gain in three

* Sinopec down after company denies chairman's comments on more reforms

* Sun Art hit 1-1/2-year low ahead of 2013 earnings

By Clement Tan

HONG KONG, Feb 28 (Reuters) - Hong Kong shares fell on Friday afternoon, with mainland markets also weaker, as investors cut their exposure in cyclical outperformers ahead of a manufacturing survey and a key China parliamentary meeting next week.

Key benchmark indexes are still down on the year, with markets nervously awaiting China's official manufacturing purchasing managers' index (PMI) for February due on Saturday, after January showed a dip to an eight-month low.

The yuan's slide this week has also inflamed anxiety around policymakers' intentions.

"Hong Kong has held up pretty well heading into the annual parliamentary meetings next week in Beijing," said Jackson Wong, Tanrich Securities' vice-president for equity sales. "

"As usual, expectations are running high for some kind of supportive policy, this time for state-owned enterprise reform, but this is a game we have played before. Not much details usually get released," he added.

At midday, the CSI300 of the largest Shanghai and Shenzhen A-share listings was down 0.6 percent, while the Shanghai Composite Index sank 1 percent. They are down 2.7 and 0.3 percent in February, deepening losses on the year to 8.1 and 4.2 percent, respectively.

The Hang Seng Index was down 0.3 percent at 22,760.8 points, while the China Enterprises Index of the leading offshore Chinese listings in Hong Kong shed 0.8 percent. They are headed for their first monthly gain in three, up 3.3 and 0.6 percent, respectively. Still, both are down 2.3 and 8.7 percent on the year.

China Petroleum and Chemical Corp (Sinopec) sank about 2 percent from multi-month highs in Hong Kong and Shanghai. The 21st Century Business Herald newspaper reported on Friday that a company spokesperson said comments attributed to Sinopec's chairman in the mainland press earlier this week were not true.

Wednesday's edition of the China Business News reported chairman Fu Chengyu as saying more specific reform plans will be announced in March during the National People's Congress. Investors had cheered plans announced last week to sell up to 30 percent of its retail oil business to private investors, seen as the first sign of reform at a state-owned enterprise.

The Chinese banking and consumer sectors were the other major drags in both markets. China Minsheng Bank sank 1.5 percent in Hong Kong and 2 percent in Shanghai.

China-focused hypermart operator Sun Art Retail Group fell 3.7 percent to its lowest since July 2012 ahead of its full year results later in the day. The stock is down 21.2 percent in 2014 and is trading at 21 times forward 12-month earnings, a 25 percent discount to its historical median, according to StarMine.

Other key earnings watched on Friday include Sun Hung Kai Properties and Li Ka Shing-linked Hutchison Whampoa and Cheung Kong Holdings. Their shares slipped 0.5, 0.1 and inched up 0.3 percent, respectively.

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