* HSI +1.0 pct, H-shares +1.9 pct, CSI300 -0.7 pct
* China shares extend losses as sentiment remains negative
* Hong Kong shares rebound as investors hunt for bargains
* China banks remain weak on lingering fears of cash crunch
By Yimou Lee and Donny Kwok
HONG KONG, June 26 China shares fell again on
Wednesday as comments by the central bank failed to end worries
about a cash crunch, while Hong Kong shares rebounded as
investors hunted for bargains after recent market turmoil.
The "Big Four" Chinese banks extended losses in China even
though the country's short-term borrowing rates eased for a
fourth day and the People's Bank of China moved late on Tuesday
to allay fears of a banking crisis. Worries have driven Shanghai
shares to their lowest in nearly 4-1/2 years.
At midday, the CSI300 index of the leading
Shanghai and Shenzhen listing was down 0.7 percent, while the
Shanghai Composite Index dropped 1.3 percent at 1,933.58
points. Both indexes have tumbled more than 10 percent since
last Wednesday when a cash squeeze in the mainland started to
The Hang Seng Index rose 1 percent, while the China
Enterprises Index of the top Chinese listings in Hong
Kong gained 1.9 percent and could have its best day in two
months. Short selling accounted for 11.6 percent of total midday
turnover, according to traders.
"Investors are taking a very short-term view. The PBOC
comments have fuelled hope that the government may loosen
liquidity a bit and that aided a rebound in the (Hong Kong)
market," said Alfred Chan, chief dealer at Cheer Pearl
Investment. But he added that the rebound could be short-lived.
Shares in the Big Four banks went in opposite directions in
the two markets, weakening in Shanghai and rising in Hong Kong,
with a lift from short-covering.
"The PBOC comments did not help much to improve people's
confidence as the consequence is yet to be seen amid slow
(China) economy growth," said Alex Wong, a director at Ample
In Hong Kong, Industrial and Commercial Bank of China (ICBC)
gained 4.3 percent and China Construction Bank (CCB)
3.9 percent, while in Shanghai ICBC
dropped 2.2 percent and CCB 1 percent.
Fears of a credit crunch and slower loan growth continued to
fuel selling in the mainland of smaller Chinese banks, which are
more reliant on short-term interbank funding.
In Shanghai, China Minsheng Banking Corp fell
3.6 percent in spite of a statement it issued on Tuesday. The
bank said that a Shanghai interbank offered rate (Shibor) hike
had not caused liquidity disruption and that the management was
confident about controlling credit risks despite the slowing
Growth-sensitive sectors in China, from energy to materials,
remained weak. Petro China fell 1.4 percent, while
Zijin Mining dropped 3.3 percent.