* HSI -0.7 pct, H-shares -1.3 pct, CSI300 -3.3 pct
* China banks slump after regulator orders more checks on
* State Council pledges to further liberalise interest rates
* China property weak, policy curb details awaited
* HK has 1st quarterly loss in three, shut for 4-day Easter
By Clement Tan
HONG KONG, March 28 China shares suffered their
worst loss in nearly a month on Thursday, as Hong Kong closed
out the first quarter on a tepid note, with banks sinking after
Chinese regulators ordered more transparency on wealth
The move is aimed at warding off potential risks to the
mainland financial system and comes after an instrument sold
through Hua Xia Bank failed to pay its annualised
return while China's CITIC Trust announced payment delay on its
product late last year.
Banks were also put under pressure after China's cabinet
said it will unveil new measures to further liberalise interest
rate and exchange rate markets later this year, stoking worries
of an erosion in banks' net interest margins.
The CSI300 of the leading Shanghai and Shenzhen
A-share listings dived 3.3 percent to 2,499.3, holding above
chart support seen at the March 19 low at around 2,492. The
Shanghai Composite Index slid 2.8 percent.
The Hang Seng Index shed 0.7 percent to 22,299.6,
coming off the highest close since March 18 it set on Wednesday.
The China Enterprises Index of the top Chinese listings
in Hong Kong shed 1.3 percent.
Losses came in the highest Shanghai volume since March 20
and exceeded its average in the last 20 days for the first time
in five days. Hong Kong turnover was above average for only the
second time in eight days, but was some 44 percent less than a
Feb. 4 peak.
"The timing of the announcement caught the market by
surprise, although people were already expecting the regulators
to act," said Hong Hao, chief strategist at Bank of
Communication International Securities.
"This is definitely not the lowest point of the market, I
won't be trading at all if I don't have to. It's not even worth
trying to catch a technical rebound in the near term," Hong
Thursday was the last day of trading for the quarter and the
month of March in Hong Kong with markets shut for a four-day
Easter weekend from Friday, reopening on Tuesday. Mainland
Chinese markets stay open throughout.
Offshore Chinese markets suffered their first quarterly loss
in three - the Hang Seng Index slid 1.6 percent and the China
Enterprises Index fell 4.7 percent after a second-straight
monthly loss in March. On the month, the Hang Seng lost 3.1
percent, while the China Enterprises Index dived 4.7 percent.
On Thursday, China Minsheng Bank tumbled 7.9
percent in Hong Kong after the China Banking Regulatory
Commission singled out risks of investment in "informal debt
assets", such as trust loans, letters of credit, accounts
receivable and bank acceptance bills, among others, in a clutch
of instruments that are broadly categorised in China as "wealth
Banks are now required to keep investments in such assets at
no higher than 35 percent of total outstanding wealth management
products, or no more than 4 percent of their total assets -
whichever is the lower amount.
The aim is to bring these products back onto the balance
sheet of banks, making it easier to track and monitor risks.
"We expect large banks to have lower WMP/asset ratio as well
as less percentage of WMPs invested into non-standard credit
assets than mid-size joint-stock banks," said May Yan, Barclays'
top-rated China banking analyst, in a note on Friday.
Mid-sized Chinese banks were among the top drags on onshore
Chinese indexes. Industrial Bank slumped the maximum
10 percent limit in Shanghai, Hua Xia Bank slid 6.2 percent and
Ping An Bank tumbled 9.6 percent in Shenzhen.
China Minsheng Bank suffered its worst
single-day loss in 4-1/2 years in Shanghai, diving 8.8 percent.
It is now still up 22.5 percent on the year, compared to the 0.9
percent loss on the CSI300 index.
More Chinese policy cues, but from the property sector,
could weigh on markets in the next few days as local governments
release details of property sector curbs that Beijing first
provided guidelines at the start of March.
China Vanke shed 2.6 percent in Shenzhen, while
Poly Real Estate slid 2.4 percent in Shanghai and
China Overseas Land lost 2.5 percent in Hong Kong.
The 21st Century Business Herald newspaper reported that
Shenzhen, a city in the southern province of Guangdong, is
likely to raise minimum down payment for second homes from 60 to
70 percent from April with the minimum mortgage rates kept
These latest government moves come after China's "Big Four"
banks reported benign bad-loan ratios as brisk lending in
fast-growing regions countered souring loans to overheated
sectors on the country's east coast.
Shares of Industrial and Commercial Bank of China (ICBC)
, which was the last among the "Big Four" to
report their 2012 results on Wednesday, slipped 0.2 percent in
Hong Kong and 2.7 percent in Shanghai.
According to Thomson Reuters StarMine, of the 76 percent of
Hong Kong-listed companies that have reported 2012 results, more
than half have missed expectations, with the energy and material
sectors accounting for the bulk of disappointments.
Sixty-seven percent of China-listed companies have reported,
with 72 percent missing expectations, with percentage
disappointments in the industrials, materials, information
technology and consumer staple sectors among the worst.
Aluminum Corporation of China (Chalco)
dived 4.5 percent in Hong Kong and 4.3 percent in Shanghai after
its 2012 net profit still came in worse than expected despite
having earlier warned of a full-year loss in January.
But in a tentative sign of recovery, China's industrial
firms made total profits of 709.2 billion yuan ($114.13 billion)
in the first two months of 2013, up 17.2 percent from the same
period of a year ago, the National Bureau of Statistics said on