* Lenovo, Alibaba sink after share sales
* Auto stocks outperform in China on strong Aug sales
* Metal stocks surge on firm commodity prices
(Updates to close)
By Parvathy Ullatil and Claire Zhang
HONG KONG/SHANGHAI, Sept 9 (Reuters) - Hong Kong shares
dropped 1 percent on Wednesday, snapping a four-session rally, on
concern about a slew of new issues expected to flood the market
soon, while Alibaba (1688.HK) and Lenovo Group (0992.HK) were
sold down after share placements.
China's key stock index closed up 0.5 percent on Wednesday,
rising for a seventh straight session led by metal stocks, after
sources told Reuters that Chinese banks' new lending in August
was stronger than previously expected.
But gains were limited after Wuliangye Yibin (000858.SZ),
one of China's top liquor makers, said in a statement that it was
under investigation by the country's stock watchdog, prompting
investors to lock in early profits. [ID:nSHA178939]
SHARE PLACEMENTS WEIGH
The benchmark Hang Seng Index .HSI finished 218.77 points
lower at 20,851.04 after tacking on more than 1,500 points in the
last four sessions, lifting the main index above 21,000 points,
which remains a key resistance level.
Turnover dropped to HK$62.7 billion from Tuesday's HK$71.1
billion.
"From the disappointing performance of the new listing today
and the falling turnover on the exchange in the last several
weeks, the signals are pretty clear. Big funds are continuing to
pull out of the market," said Alex Tang, research director at
Core Pacific-Yamaichi International.
New listing Modern Media (0072.HK) rose just 6.2 percent to
HK$1.37 on Wednesday, a far cry from the strong surges in stocks
that debuted last in July and August.
Market watchers expect 14 new issues, which will raise a
total of about HK$70 billion ($8.97 billion), to hit the market
in September.
The China Enterprises Index .HSCE, which represents top
locally listed mainland Chinese stocks, was down 1.4 percent at
12,105.54.
Geely Automotive (0175.HK) rose nearly 4 percent before
paring some of the gains after the carmaker posted a strong surge
in first-half earnings after increasing its stake in its
associate companies. The stock finished 1.9 percent higher.
Seperately, Geely's parent will bid for Ford Motor-owned
(F.N) carmaker Volvo Car Corp with a local-government backed
investment firm, a Geely executive said on Wednesday.
[ID:nHKG180468]
Alibaba.com fell 6.7 percent to HK$20.20 after Jack Ma,
chairman and founder of China's largest business-to-business web
marketplace, sold 13 million shares for about $35 million.
Lenovo slid 5.7 percent to HK$3.45 after a major shareholder
in the world's No. 4 PC maker sold 292 million shares at a
discount of 2.5-3 percent from Tuesday's close. It was the among
most heavily traded stocks on Wednesday, with shares worth
HK$1.38 billion changing hands.
AUTO SHARES OUTPERFORM
The Shanghai Composite Index .SSEC still ended up at
2,946.259 points, having now jumped 12 percent since it hit this
year's intraday low on Sept. 1, with government policy support
offsetting negative factors including profit-taking pressure and
heavy supplies of new shares.
Wuliangye was the most active stock in Shenzhen, tumbling 6.2
percent to close at 22.60 yuan in the stock's heaviest daily
turnover since its listing in 1998, according to Reuters data.
"Wuliangye's case made jittery investors lock in profits and
capped gains, hurting overall sentiment," said Zhang Qi, senior
analyst at Haitong Securities in Shanghai.
Gaining Shanghai A shares nearly matched losers by 443 to
414, while turnover rose to a relatively decent 153 billion yuan
($22 billion) from 148 billion yuan on Tuesday.
In the latest sign of government support for the market, the
official Shanghai Securities News reported on Wednesday that the
China Securities Regulatory Commission was slowing the pace of
approvals for initial public offerings (IPO).
Chinese banks extended about 370 billion yuan ($54.2 billion)
in new local currency loans in August, a touch more than 356
billion in July and topping market expectations, two sources who
have seen the official data told Reuters late on Tuesday.
[ID:nSP495007]
"Investors had expected worse but the actual data appears to
be beating expectations," said Qian Xiangjing, chief analyst at
CITIC-Kington Securities in Hanzhou.
"And helped by a string of official market-friendly measures,
the index may have the opportunity to test the key 3,000-point
level in coming days."
That will mark a reversal of the trend in August when the
index plunged 22 percent in its second worst monthly performance
in 15 years amid worries including heavy share supplies and
shrinking lending.
Metal shares shone as a globally weak dollar helped push up
commodity prices around the world. Western Mining (601168.SS)
closed up 5.16 percent at 14.68 yuan and Jiangxi Copper
(600362.SS) added 6.20 percent to end at 40.08 yuan.
Brokerage shares jumped, partly drawing strength from media
reports that China may release draft rules for foreign firms to
float shares in the Shanghai Stock Exchange. Sinolink Securities
(600109.SS) jumped its 10 percent daily limit to 21.63 yuan.
(Editing by Jacqueline Wong & Jonathan Hopfner)
