(Updates to close)
* HSI down 0.1 pct, Shanghai down 1 pct
* HSI briefly retook support level that broke on Friday
* Bearishness in weak turnover on both bourses
* Bets on aggressive China policy easing misplaced-CICC
By Clement Tan
HONG KONG, Dec 12 Hong Kong shares
reversed early gains to end 0.1 percent lower on Monday as the
Shanghai Composite Index closed at its lowest since March 2009
on doubts that Beijing will loosen monetary policy enough to
cause a growth spurt.
Property stocks fell sharply in the mainland after Xinhua
News Agency on late Friday reported that Beijing would maintain
its "unswerving stance" on tightening measures for the property
market in the new year, citing a Communist Party Politburo
meeting chaired by President Hu Jintao.
The Shanghai index, which had not been below 3,200
since March 2009, closed down 1 percent at 2,291.5 points.
A-share turnover in Shanghai slumped to a fresh 3-year low.
In Hong Kong, turnover was the lowest in 10 sessions, ahead
of the central government's annual economic meeting, reported to
be taking place this week by media in the mainland, as investors
look for clues of possible monetary policy easing to prop up the
slowing domestic economy.
On Nov. 30, China cut reserve requirements for commercial
lenders for the first time in nearly three years. Since then,
optimism on the mainland about seeing a series of easing moves
to boost growth has dimmed.
"The smart money is not buying in either mainland or Hong
Kong markets," Hong Hao, a Beijing-based global equity
strategist with China International Capital Corp (CICC), told
"The government is still very reluctant to release curbs on
property. While it is stuck between a rock and a hard place,
Beijing runs the risk of going behind the monetary policy curve
at this pace," Hong added.
On Monday, the Hang Seng finished at 18,575.7 points, after
earlier retaking the 18,818 level in morning trade, a level that
had served as support for more than a week before Friday.
The Shanghai Composite Index closed down 1 percent
at 2,291.5 points, underperforming Asian peers. The China
Enterprises Index of the top mainland shares listed in
Hong Kong finished down 0.1 percent.
In Shanghai, the two biggest property developers, China
Vanke Co Ltd and Poly Real Estate Group Co Ltd
, declined 3.2 and 3.5 percent respectively. Anhui
Conch Cement lost 2.9 percent.
In Hong Kong, stocks seen as proxies for the onshore A-share
market led the reversal after the midday break. China insurers
and brokerages were among the biggest drags on benchmarks.
China Life Insurance Co Ltd, which has sizable
A-share investments, lost 1.7 percent, while Citic Securities Co
Ltd, the mainland's biggest securities firm, bled 4.3
Underscoring fragile market confidence, Haitong Securities
Co Ltd, China's No.2 brokerage by assets, pulled its
planned Hong Kong stock offering of up to $1.7 billion due to
poor market conditions, sources said on Monday.
MILD CHINA STIMULUS SEEN
A note by Hong of CICC on Monday warned that investors
betting on aggressive easing may be disappointed, suggesting any
monetary policy loosening is merely going to offset the slowdown
in the China economy, rather than change economic trajectory.
A Reuters poll on Monday suggested that China will not
resort to aggressive policies to stimulate its cooling economy
in 2012, with only a sharp slowdown in growth below 8 percent
likely to trigger interest rate cuts or fresh fiscal
The Hang Seng Index and the China Enterprise Index are down
more than 18 and 20 percent respectively this year, ranking
among the worst performers in Asia this year -- largely on the
strength of a sell-off in the third quarter as investors priced
in a "hard landing" in China.
Recent signs suggest that mainland markets, which are
largely closed to foreign investors, are performing relatively
worse than the H-share market.
Despite's Monday losses, the China Enterprises Index
, also known as the H-share index, is up 5.8 percent in
December, while the Shanghai Composite is down 1.8 percent.
(Editing by Richard Borsuk)