* HSI -1.5 pct, H-shares -1.1 pct, CSI300 -0.9 pct
* Hong Kong indexes on track for worst week in a year
* China banks pare losses, cash crunch fears ease as money
* Galaxy Entertainment fall again after JP Morgan downgrade
By Clement Tan
HONG KONG, June 21 Hong Kong and China shares
pared hefty losses before Friday's midday break, as Chinese
banking stocks recovered following speculation the central bank
quietly added funds to the market, easing some fears of a
broader banking crisis.
Traders said there was some fresh buying in the offshore
Chinese market in some of this week's worst-hit sectors and
firms with better balance sheets. Some short covering in index
futures and exchange-trade funds (ETFs) also helped.
The Hang Seng Index ended the morning down 1.5
percent at 20,084.8 after falling below the 20,000-point mark
and being about 2 percent off. The China Enterprises Index
of the top Chinese listings in Hong Kong shed 1.1
The Shanghai Composite Index and CSI300 of
the leading Shanghai and Shenzhen A-share listings each sank 0.9
percent. They are each down almost 5 percent on the week.
Both Hong Kong indexes were headed for their sixth-straight
weekly loss and their worst week since May 2012, down 4.2 and
5.2 percent respectively. The H-share index was at its most
technically oversold in 15 years, with its relative strength
index standing at 17.7.
"The bigger picture still remains awful, there's no need to
get too excited about some of the beta gains today," said Alex
Wong, director of asset management at Ample Finance. He said he
bought some long positions in high beta names and China telcos
for their relatively better cash positions.
"The meltdown in the last few days has been quite violent
and you have to remember some investors are still very
underinvested, so it's more about pre-weekend positioning," Wong
China banks were broadly weaker in Hong Kong, but pared
losses on the day after the overnight bond repurchase rate
- a measure of the cost of cash - fell to 8.39
percent on a weighted average basis on Friday. That was down
sharply from Thursday's close of 11.62 percent, but still more
than double typical levels.
This was amid talk that the Chinese central bank had given
"window guidance" to major state banks to offer cash, traders
said. Helped by the speculation, midday Shanghai volume improved
Shares of Bank of Communication were
down 3.4 percent in Hong Kong and 0.5 percent in Shanghai. China
Minsheng Bank fell 4.9 percent in Hong
Kong and 1.1 percent in Shanghai.
There were gains for some of the smaller Chinese banks
listed in the mainland. Bank of Nanjing rose 2
percent in Shanghai after closing on Thursday at a six-month
low. Everbright Bank rose 0.7 percent.
Shares of Macau casino operator Galaxy Entertainment
dived 7 percent, falling further from Wednesday's
record closing high after JP Morgan downgraded the stock from
overweight to neutral.
Sector rival Macau Legend Development Ltd
postponed an initial public offering expected to raise up to
$786 million, sources said on Friday. This was the third deal to
be delayed in Hong Kong in a month.
REBOUNDING FROM LOWS
In Hong Kong, some China coal miners, independent power
producers and insurers were among the outperformers on the day.
China Shenhua Energy climbed 2 percent, reversing
losses after testing a four-year low.
New China Life Insurance (NCI) surged 5.8
percent to its highest in two weeks in Shanghai and rose 1.1
percent in Hong Kong. Central Huijin, China's state-owned
investment company, bought into the insurer's A-shares last
Huijin said late on Thursday it recently added ETFs in the
secondary market, adding to a statement on Monday that it
increased its stakes in China's "Big Four" banks and last week's
announcement of purchases in Everbright Bank and NCI.
The mainland's two benchmark indexes are now down about 9
percent in 2013, but outperforming offshore China peers with the
Hang Seng China A-H Price Index briefly touching a
one-year high. This suggests A shares are trading at the biggest
premium over H shares since June 2012.
The H-share index is down 20 percent on the year. Short
selling in Hong Kong accounted for 10.4 percent of total
turnover by midday, lower than 15 percent on Thursday and 13
percent on Wednesday, but still above a historical 8 percent