* HSI -1.2 pct, H-shares -1.7 pct, CSI300 -1.7 pct
* Money market rates spike, China stocks in 1st weekly loss
* Block sale weighs on PICC Group, stock nears IPO price
* Chalco little moved after asset disposal announcement
By Clement Tan
HONG KONG, June 7 Hong Kong shares wrapped up
their worst week in more than a year with a 1.2 percent drop on
Friday as investors braced for U.S. jobs data that could lead to
a tapering of the Federal Reserve's monetary stimulus.
Mainland Chinese markets posted their first weekly loss in
six as investors grappled with tight money supply before a
three-day holiday next week and a slew of fresh economic data
for May starting over the weekend.
The Hang Seng Index ended at 21,575.3 points, and
chart support is next seen at its April low at about 21,423. The
China Enterprises Index of the top Chinese listings in
Hong Kong slid 1.7 percent.
The CSI300 of the leading Shanghai and Shenzhen
A-share listings sank 1.7 percent and the Shanghai Composite
Index 1.4 percent with bourse volume some 16 percent
below its average in the last 20 days.
On Friday, China's money rates skyrocketed from already-high
levels the previous day, pushed up partly on rumours that a
mid-sized bank had failed to repay an interbank loan. Dealers
said that virtually the entire market was short of cash, with
few or no banks willing to lend.
On the week, the Hang Seng Index skidded 3.6 percent, its
fourth consecutive weekly slide and the worst since May 2012.
The H-share index dropped 3.9 percent. The CSI300 and Shanghai
Composite dived 4.7 and 3.9 percent, respectively.
"It's getting quite frustrating," said Larry Jiang, chief
strategist at Guotai Junan International Securities. "I don't
think anybody is in too much of a hurry to do too much, and even
then, it's quite difficult to look beyond the short term now."
The cash squeeze in the mainland hurt most Chinese banking
shares, particularly smaller ones. Bank of China fell
2 percent in Hong Kong and 0.7 percent in Shanghai. Industrial
Bank slid 1.7 percent in Shanghai.
Mainland Chinese markets will be shut for the first three
days next week for the Dragon Boat Festival holiday and resume
trading on Thursday. Hong Kong will be closed on Wednesday.
Data over the weekend will likely show growth in China
investment and factory output probably remained listless in May
on soft domestic demand, a Reuters poll showed. This would
heightening risks that the Chinese economy may cool further in
the second quarter.
China's new leaders will show greater tolerance for an
economic slowdown than their predecessors did, and are likely to
allow year-on-year quarterly growth to slip as low as 7 percent
before launching fresh stimulus to lift activity, sources told
PICC GROUP DIVES
On Friday, Chinese insurer PICC Group tumbled 5.7
percent to HK$3.61. Exchange data showed a block of 106 million
shares was sold at HK$3.45 apiece in an early trade, below its
HK$3.48 initial public offering price last November.
Friday's plunge was PICC's biggest since its Dec. 10 trading
debut, and came in volume that was more than 12 times its 30-day
PICC counted American International Group, China utility
State Grid Corp, China's leading gold miner Zijin Mining Group
and China Life Insurance among its cornerstone investors, who
agreed to a lock-up period of typically six or 12 months, during
which they could not sell their shares.
Aluminum Corporation of China (Chalco)
slipped 0.5 percent in Shanghai and ended flat in Hong Kong
after saying it would sell some aluminum fabrication and alumina
assets to its parent.