* HSI +0.9 pct, H-shares +1.9 pct, CSI300 +0.6 pct
* Beta plays lifted by benign China March inflation data
* Gains in relatively weak volume, short covering in HK
* Belle jumps after positive Q1 SSS growth
By Clement Tan
HONG KONG, April 9 Hong Kong shares were headed
for a first gain in four days on Tuesday as slower-than-expected
inflation in China eased concerns about potential tightening
moves in the world's second-largest economy.
Annual consumer inflation eased to 2.1 percent in March,
compared with a 2.4 percent Reuters consensus and February's 3.2
percent. Producer price deflation deepened, dropping 1.9 percent
in March, versus a 1.8 percent consensus and February's 1.6
percent annual drop.
At midday, the CSI300 of the leading Shanghai and
Shenzhen listings was up 0.6 percent. The Shanghai Composite
Index gained 0.4 percent at 2,221.4. Both indexes
rebounded from their lowest since December.
The Hang Seng Index climbed 0.9 percent, set for its
first gain in four days. The China Enterprises Index of
the top Chinese listings in Hong Kong spiked 1.9 percent,
returning above its 200-day moving average after dropping below
that technical level last Friday.
Still, Hong Kong gains came in the weakest midday turnover
since March 22. Shanghai volume was similarly weak. Bird flu
jitters in the last few days had compounded a selloff since an
early February peak in both the China and Hong Kong markets.
"This lower inflation figure is giving the cyclical sectors
a small lift, but gains in Hong Kong look largely on short
covering," said Wang Aochao, UOB-Kay Hian's Shanghai-based head
More economic data is expected later this week, with trade
on Thursday and money supply and loan growth expected between
April 10 and 15. First quarter GDP growth data is due on April
15 along with industrial output, retail sales and urban
investment data for March.
On Tuesday, growth-sensitive sectors outperformed, with
mid-sized lenders seeing the bigger percentage gains in the
banking sector. China Minsheng Bank jumped
3.3 percent in Hong Kong and 1.2 percent in Shanghai.
Chinese cement producers Anhui Conch Cement
jumped 5.4 percent in Hong Kong and 2.4
percent in Shanghai, while China National Building Material Co
Ltd spiked 4.8 percent.
Positive quarterly earnings reported on Monday by Alcoa Inc
, the largest U.S. aluminum producer, further buoyed the
materials sector. Aluminum Corporation of China (Chalco)
rose 2.1 percent in Hong Kong and 1 percent
But China SCE Property Holdings Ltd.
underperformed, slipping 0.6 percent after Hong Kong media
reported the Chinese property developer was ordered to stop
sales of a project in the Chinese city of Xiamen after it was
adjudged to have violated new home sales restrictions.
The official China Securities Journal newspaper reported on
Tuesday that Chinese first-tier cities including Shanghai,
Guangzhou and Shenzhen are expected to raise down payment
requirements for second homes, following Beijing's lead.
BENIGN INFLATION LIFTS CONSUMER SECTOR
China-focused food and beverage giant Tingyi Holdings
climbed 2.9 percent to its highest in three weeks on
hopes that benign inflation will ease margin pressures. Sector
peer Want Want China climbed 3.4 percent.
Shoe retailer Belle International jumped 5.2
percent as investors cheered its positive first quarter same
store sales growth (SSSG). The 11 percent SSSG growth for its
sportswear business in the first quarter was its fastest in more
than four years, Bank of America-Merrill Lynch analysts said.
Tuesday's gains look set to lift Belle further from its
lowest since end-June, which was posted last Friday. Still down
more than 21 percent on the year, the consumer discretionary
counter is currently trading at a 23 percent discount to its
historic median 12-month forward earnings multiple, according to
Thomson Reuters StarMine.
By comparison, consumer staples Tingyi is down 2.3 percent
and trading at a 6 percent premium, while Want Want China is up
8.9 percent and trading at a 15 percent premium. All three
stocks are constituents on the Hang Seng Index, which is now
down 3.3 percent in 2013.