China shares edge down on weak financials; Hong Kong flat

Tue Aug 19, 2014 12:59am EDT

* HSI +0.1 pct, H-shares flat, CSI300 -0.2 pct

* China's financial shares in correction phase - analyst

* Media shares up as President Xi pledges to modernise sector

* Hong Kong shares flat ahead of major bank earnings

By Chen Yixin and Pete Sweeney

SHANGHAI, Aug 19 (Reuters) - China's stock indexes fell slightly by midday on Tuesday due to weakness in the financial sector while Hong Kong shares were mostly flat on investor caution ahead of earnings.

By midday, the CSI300 index of leading Shanghai and Shenzhen A-share listings was down 0.2 percent. The Shanghai Composite fell 0.2 percent to 2,234.61 points, easing from an 8-month high earlier struck earlier in the day.

In Hong Kong, the HSI index edged up 0.1 percent to 24,977.66 points, with the China share sub-component was flat at 11,067.56 points.

"The financial and insurance sector has experienced a dramatic increase earlier, helping boost the bullish sentiment in the market. Now they are in a correction period," said Zhang Yanbin, an analyst from Zheshang Securities.

Ping An Insurance (Group) Company of China dropped 0.9 percent and China Merchants Bank Co Ltd fell 0.7 percent.

But several analysts expect the market has potential for further gains, supported by a slew of government policies.

"I believe that the Chinese stock market is at the beginning of a bullish market due to more and more friendly government policies," Zhang said.

Strength in media shares boosted the Shanghai index to an eight-month high in morning trade as China's President Xi Jinping pledged to modernise the industry.

President Xi said on Monday that China would build new classes of more credible and competitive media and integrate traditional media with new media, the official government newspaper, China Daily, reported.

People.cn Co Ltd, the Chinese government's official newspaper as well as the mouthpiece of the ruling Communist Party of China, was the leading stock in the media sector. It jumped by its 10-percent daily limit, hitting its highest level since the end of June.

Jishi Media, a Jilin provincial-level government media group, also gained near 5.0 percent.

Hong Kong markets were subdued ahead of corporate earnings results later in the session.

"The sentiment is cautiously optimistic," said Linus Yip, chief strategist at First Shanghai Securities. "Instead of taking any major position, investors tended to stay on the sidelines ahead of earnings from some major corporations such as Chinese banks."

Bank of China was down 0.3 percent and BOC Hong Kong Holdings was off 0.2 percent. Both companies are due to announce half-year earnings later on Tuesday.

Elsewhere, China National Offshore Oil Corp (CNOOC) supported the Hang Seng Index, rising 1.7 percent. The energy company said its new petrochemical plant planned to use rising exports of U.S. liquefied petroleum gas as a cost-savings feedstock.

(Additional reporting by Donny Kwok in HONG KONG; Editing by Jacqueline Wong)