* HSI +2.3 pct, H-shares +3.1 pct, CSI300 +2.8 pct
* China brokers lead on resumption of RQFII quota
* Commodities reprieve helps stocks cut steep weekly losses
* Beta short squeeze in HK lifts Lenovo, Chinese banks
* Volumes improve, but still some way shy of 2013 highs
By Clement Tan
HONG KONG, April 19 Mainland China shares
outshined Asia with their best day in a month on Friday, while
Hong Kong markets snapped a five-day losing streak, as investors
cheered local news reports pointing to increased foreign
participation in the A-share market.
Traders said Hong Kong gains accelerated after investors
rushed to cover short positions on exchange-traded funds based
on the Hang Seng Index at around 21,800, as the index
bounced from Thursday's five-month closing low.
The Hang Seng Index closed up 2.3 percent at 22,013.6,
cutting weekly losses to 0.3 percent. The China Enterprises
Index of the top Chinese listings in Hong Kong jumped
3.1 percent to 10,587.3 on Friday, but still slipped 0.6 percent
Gains on Friday were their best since Jan. 2, their first in
six days and came in bourse turnover that despite being the best
since April 5, was still only more than half of the year's
heaviest on Feb. 4.
The CSI300 of the leading Shanghai and Shenzhen
A-share listings closed up 2.8 percent on the day and 2.9
percent on the week at 2,533.8. The Shanghai Composite Index
gained 2.1 percent on Friday and 1.7 percent this week.
Friday's gains were the best since March 20 for both indexes
and elevated them to their highest closing levels since March
27. Shanghai bourse volumes were the best in four weeks, but was
still only two-thirds of the year's heaviest on Feb. 4.
"Increased foreign interest will mean more liquidity for the
A-share market, this will boost brokerages," said Cao Xuefeng,
Chengdu-based head of research for Huaxi Securities.
The brokerage sector surged after the 21st Century Business
Herald reported regulators had resumed taking quota applications
under the renminbi qualified foreign institutional investor
(RQFII) scheme after a two-month suspension, citing Bosera Asset
Reports of discussions between regulators and MSCI index
managers on the potential addition of A shares into their
emerging market indexes also further buoyed sentiment, in a move
that could drive more passive foreign funds into the mainland.
China's largest-listed brokerage CITIC Securities
spiked 7 percent in Hong Kong and 5.5
percent in Shanghai. The smaller Founder Securities
soared 8.9 percent in Shanghai and is now up more than 64
percent for the year.
CITIC was further boosted by an upgrade by UBS analysts from
"sell" to "neutral", anticipating China's largest listed
brokerage will gain market share at the expense of smaller ones
and strong growth in its margin financing business.
BOUNCE FROM LOWS AHEAD OF Q1 EARNINGS SEASON
The Chinese banking sector was also a standout outperformer
at the end of a week littered with headlines about regulations
on the proliferation of wealth management products, local
government debt and money laundering.
Part of the problem, traders said, stems from the fact there
is a lack of consensus among China's various policy makers,
chiefly its central bank and its banking, securities and
Industrial and Commercial Bank of China (ICBC)
jumped 4 percent in its best day since Oct. 11 in
Hong Kong, but is still down 4.4 percent for the year. Its
Shanghai listing rose 1.2 percent.
Mid-sized lender China Minsheng Bank
surged 8.1 percent in Shanghai and 5.6 percent in Hong Kong.
First quarter corporate earnings season is due to start next
week, with Minsheng's expected next Wednesday.
In a note to clients, Goldman Sachs China equity strategists
swapped China retail for cement H-shares on a stronger fixed
asset investment outlook, while favouring banks with earnings
and valuation support and utilities.
Goldman's strategy team also cut their end-2013 targets for
the China Enterprises Index from 13,700 to 12,400 and the CSI300
from 3,000 to 2,800, citing the lower-than-expected first
quarter GDP growth figure that China posted earlier this week.
Commodities-related sectors rebounded from multi-month lows
following a mild rebound in the physical commodity markets.
China's biggest gold miner Zijin Mining
rose 2.7 percent in Hong Kong and 1.9 percent in Shanghai.
Zijin's Hong Kong shares had on Thursday closed at their
lowest since October 2011. It dived 8.8 percent this week, its
worst weekly showing in almost a year after a brutal sell-off in
the physical gold market earlier this week.
Shares of Lenovo Group surged 9.5 percent from
Thursday's 5-1/2-month closing low after the company said it was
in preliminary talks about a potential acquisition.
This followed a media report that IBM Corp was
negotiating the sale of its x86 server hardware business to the
Chinese computer maker.