Hong Kong stocks steady; China down on soft exports, debt worry

Thu Apr 10, 2014 1:04am EDT

* HSI +0.1 pct, H-shares -0.7 pct, CSI300 -0.1 pct

* H-shares down on weak exports

* Hong Kong Jewellery down on weak earnings

By Natalie Thomas and Chen Yixin

SHANGHAI, April 10 (Reuters) - Hong Kong stocks steadied at midday after early losses, while China shares listed in the territory drifted lower over more signs of a slowdown in the world's second-largest economy.

Shares on the mainland were also down slightly after China's top economic planning agency said that the country has less and less room to rely on policy tools to support the economy as it tries to arrest a protracted slowdown this year.

By midday, the Hang Seng Index was up 0.1 percent at 22,874.25 points. The China Enterprises Index of the top Chinese listings in Hong Kong dropped 0.7 percent.

The CSI300 index of the largest Shanghai and Shenzhen A-share listings eased 0.1 percent, while the Shanghai Composite Index fell 0.1 percent to 2,104.25 points.

In Hong Kong, investors sold off H-shares in the morning, after customs data released early on Wednesday showed a 6.6 percent year-on-year fall in exports in March, missing market expectations for a 4 percent rise.

Imports also slipped 11.3 percent, providing further evidence of a contraction in the mainland economy.

"We are seeing profit-taking, especially on the export data which was worse than expected and people are using this as an excuse to take some profit off the table," said Jackson Wong, Tanrich Securities vice president of equity sales in Hong Kong.

China losses centred around property after the National Development and Reform Commission (NDRC) said in a report that property debt may cause systemic financial risks, sparking worries over the funding situation in China's real estate market.

The CSI300 property sub-index slumped 1.6 percent by midday, with China Vanke Co Ltd, the country's largest listed real estate developer, losing 2.2 percent.

Analysts were not overly concerned about the risks from the sector.

"The government is just expressing its concern, which may spark worries, but the property companies still can find ways to raise money," said Cao Xuefeng, head of research at Huaxi Securities in Chengdu.

Hong Kong Jewellery was also down after Chow Tai Fook reported results below expectations showing same store sales growth in the fourth quarter fell in Hong Kong and Macau, leading the stock to shed 6.5 percent.

The results led the overall jewellery sector down with smaller rival Luk Fook easing 5.8 percent, King Fook down 4.4 percent and Emperor Watch & Jewellery Ltd off 3.3 percent.

Shares in Cathay Pacific jumped 3.0 percent, helped by the news that it would open a new route between Hong Kong and Manchester airport in the UK, and what analysts say is the company's relatively low valuation relative to other Hong Kong blue chips. (Additional reporting by Alice Woodhouse in Hong Kong; Editing by Jacqueline Wong)