(Updates to midday)
* HSI slips 1.1 pct, Shanghai Comp down 1 pct
* Bearish technical signs developing for both markets
* Chinese banks weak, loan growth, Q1 GDP data eyed
* Li & Fung extends downward spiral
By Clement Tan
HONG KONG, April 10 Hong Kong shares fell over
one percent on Tuesday, dragged lower by banks after a holiday
weekend during which weak data from the U.S. and
higher-than-expected inflation in China dented risk appetite.
Mainland Chinese markets were also weak, with the Shanghai
Composite Index set for its second straight loss, down 1
percent at midday with bearish signals developing on the charts.
Both markets were little swayed by data on Tuesday that
showed China swinging to a surprise trade surplus of $$5.35
billion in March as import growth eased from a 13-month peak.
But along with data on Monday that showed China's annual
inflation rate jumping more than expected in March to 3.6
percent, expectations of near-term monetary policy easing could
be doused if other data come in stronger than expected.
The China Enterprises Index was down 1.4 percent,
while the broader Hang Seng Index lost 1.1 percent to
below its 23.6 percent Fibonacci retracement of its move from
October lows to February highs.
A gauge of Chinese financials listed in Hong Kong
was among the bigger underperformers, slipping 1.5 percent, with
China Construction Bank (CCB) the top drag on the Hang
Seng Index, shedding 1 percent.
"The Chinese banking sector is kind of stuck at this point.
March loan growth data and first-quarter GDP figures could give
investors a better idea of what Beijing could do to boost
growth," said Jackson Wong, Tanrich Securities' vice-president
for equity sales.
Foreign exchange reserves, money supply and loan growth data
are expected anytime from Tuesday to Sunday, with first-quarter
GDP and March industrial output, urban investment and retail
sales scheduled for Friday.
China Minsheng Bank produced a rare gain among
Chinese banks, up 0.1 percent to HK$7.48 in midday volume double
its 30-day average on some brokerage upgrades after the bank
completed its H-share placement.
Goldman Sachs analysts upgraded their target price for the
mid-tier Chinese lender from HK$9.70 to HK$10, while Nomura
upgraded the stock from neutral to buy, while raising its target
price from HK$7.47 to HK$8.70.
GROWTH-SENSITIVE SECTORS SLIDE
On Tuesday, exporter Li & Fung continued its
downward spiral on lacklustre U.S. data, slumping 3 percent to
HK$16.70, nearing lows in February and March this year that
formed a double bottom on the charts at about HK$16.40.
Li & Fung, which manages supply chains for retailers
including Wal-Mart Stores Inc and Target Corp,
has now slumped 16 percent since March 23 when it closed at its
highest since last April.
In Shanghai, fears that slowing growth could hurt demand
more than expected hit resources-related stocks, with the
Shanghai materials sub-index the standout
underperformer, slumping 2.4 percent.
China's imports of copper fell 4.6 percent to 462,182 tonnes
in March from 484,569 tonnes the previous month.
Jiangxi Copper slipped 1.6 percent, while Xiamen
Tungsten Co Ltd slumped 6.3 percent. Inner Mongolia
Baotou Steel Rare Earth Group was the top drag on
the Shanghai Composite, slumping 6.5 percent.
(Editing by Nick Macfie)