(Updates to midday)
* HSI +0.1 pct, H-shares -0.1 pct, CSI300 -0.4 pct
* HKEx at highest since May, capital inflows to buoy HK
* China Mobile slightly higher ahead of Q3 earnings later
* Longfor, Greentown up after Goldman Sachs says conviction
By Clement Tan
HONG KONG, Oct 22 Hong Kong shares made slight
gains during Monday morning trade to outperform Asian peers,
with bourse operator Hong Kong Exchanges (HKEx)
benefitting from expectations that trading will be buoyed by
rising capital inflows into the territory.
Money flowing into Hong Kong forced the territory's monetary
authority to intervene in the currency market on Saturday for
the first time in three years after the Hong Kong dollar
pushed against the top-end of its trading band.
The Hang Seng Index ended the morning session up 0.1
percent at 21,578.5, in a quiet start to the week having clocked
gains in each of the previous seven weeks.
Meantime, the China Enterprises Index of the top
Chinese listings in Hong Kong slipped 0.1 percent.
And mMainland Chinese markets were weaker too, with traders
citing a report in state-run China Business News that Shanxi
province has launched a new policy to cap property developers'
profits at 10 percent, penalising those that exceed the cap by
withholding their pre-sales permits.
The CSI 300, made up of the top Shanghai and
Shenzhen listings, was down 0.4 percent, while the Shanghai
Composite Index slipped 0.5 percent.
Although it outperformed Asian peers and is hovering at its
highest intra-day level since March, the Hang Seng's gains have
been stymied by chart resistance at about 21,600 since last
Thursday. Hong Kong markets are closed for a public holiday on
Some traders interpreted Hong Kong Exchange's (HKEx) gains
as evidence of favourable underlying sentiment.
HKEx rose 2.4 percent to its highest since May, with the
taking the hare price into positive territory on the year. HKEx
is now up 0.8 percent in 2012, compared to the 17 percent rise
on the Hang Seng Index, as trading volumes fell off sharply this
"I think you can tell from HKEx today that (foreign) money
remains quite positive on China. There's some profit taking
today, but volumes are quite small," said Jackson Wong, Tanrich
Securities' vice-president for equity sales.
Otherwise, the markets were weighed down by weakness in the
shares of the two Chinese oil majors. CNOOC shed 0.7
percent, while PetroChina fell 1.8 percent
on both the Hong Kong and Shanghai exchanges.
EARNINGS BACK IN FOCUS
China Mobile, the country's largest mobile
operator, is expected to kickstart the third-quarter corporate
earnings season among Chinese companies listed in Hong Kong
later on Monday.
Its share rose 0.7 percent, bringing its total 2012 gain to
more than 12 percent to date.
China Mobile is currently trading at an 8 percent discount
to its historic 12-month forwards earnings multiple and a 23
percent discount to its 12-month forward price-to-book value,
according to Thomson Reuters StarMine.
In the last 30 days, six out of 33 analysts have cut their
2012 full year earnings-per-share estimate for China Mobile by
average of 0.3 percent, according to StarMine.
Shares of Baotou Steel Rare-Earth (Group) Hi-Tech Co
, fell 3.4 percent after China's top rare earths
producer posted a 90 percent slump in net profit for the third
quarter from a year earlier.
This, along with reports of fresh curbs on the property
sector in Shaanxi, put the Chinese resources sector under
pressure as investors used the opportunity to take profits in a
sector that has been an outperformer.
Jiangxi Copper slipped 2.4 percent in
Hong Kong, trimming its gains this month to 3.9 percent after
surging almost 17 percent last month. It rose 1.7 percent in
China Vanke lost 1.5 percent in Shenzhen, while
Poly Real Estate slid 1.1 percent in Shanghai.
But investors in Hong Kong largely shrugged off the report
on Shaanxi. Longfor Properties rose 2.3 percent and
Greentown China jumped 4.4 percent after Goldman Sachs
added both Chinese developers as conviction buys in Asia
"We expect Longfor to deliver strong-than-peer contract
sales growth in 2012 on its opportune land banking since the
second quarter in 2012, strong brand equity and execution
ability," Goldman Sachs said in a report on Monday.
(Additional reporting by Vikram Subhedar; Editing by Simon