China shares fall on weak energy, financials; HK down on casinos

Thu Aug 7, 2014 12:52am EDT

* HSI -0.5 pct, H-shares -0.5 pct, CSI300 -0.7 pct

* Macau gaming sector down as mass table revenue growth slows

* China Unicom sinks ahead of H1 results

* HKEx rises to more than three-year high after earnings (Updates to midday)

By Grace Li

HONG KONG, Aug 7 (Reuters) - China shares slid on Thursday as the country's large banks and oil firms extended a retreat from recent highs, while a weaker Macau gambling sector hurt by disappointing revenues weighed on Hong Kong markets.

By midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings fell 0.7 percent, while the Shanghai Composite Index was off 0.6 percent at 2,204.33 points, as both are headed for their third straight daily loss.

The Hang Seng Index and the China Enterprises Index of the top Chinese listings in Hong Kong each slipped 0.5 percent. The benchmark index stood at 24,458.06 points.

"The Hong Kong market in the near term will still be under a kind of mild consolidation, but the upside potential is still strong because of the strong liquidity inflow," said Steven Leung, sales director at brokerage UOB Kay Hian.

Casino stocks were the standout underperformers on Thursday, with Sands China, Wynn Macau and Galaxy Entertainment Group all down more than 5 percent.

Deutsche Bank in its latest report lowered third-quarter and full-year revenue forecasts for the sector this year, citing softer VIP volume and slower growth for mass table revenue in July.

Wells Fargo also said in a research note on Wednesday that they "believe 2014 is likely to be choppy" for Macau, adding that transit visa changes and China's anti-corruption campaign could be factors in the weak results.

Also aggravating investors' concerns is a labour shortage the operators are facing as they rush to build more casinos. Labour strains look set to intensify with workers demanding higher pay and threatening strikes.

In Shanghai, top index drags PetroChina dipped 0.6 percent and Industrial and Commercial Bank of China fell 0.8 percent.

Inner Mongolia BaoTou Steel Union jumped the maximum allowed 10 percent limit. Its shares have surged more than 22 percent this week, after the company said it had won central government approval to establish a rare earth group with the aim of industry consolidation.

Aluminum Corp of China which also got such approval, climbed another 1.7 percent after Wednesday's 10 percent gain.

Hong Kong Exchanges and Clearing (HKEx) spiked 2.4 percent to its highest since April 2011.

Daiwa Capital Markets raised the target price for HKEx to HK$192.7 from HK$168.7, saying the company's interim results on Wednesday showed "its operating costs are stabilising and should bode well for its earnings outlook."

China Unicom shed another 3.2 percent after Wednesday's drop of 5.3 percent, the biggest since May 2013. Analysts said its first-half earnings later in the day could miss forecasts. (Editing by Jacqueline Wong)