* HSI +1.5 pct, H-shares +1.9 pct, CSI300 +0.6 pct
* China coal, property again buoy index gains
* Rongsheng slumps to record low after profit warning
By Clement Tan
HONG KONG, July 5 Hong Kong shares rose for a
second day on Friday as coal counters clawed back steep losses
from earlier this week, buoyed by favourable stimulus rhetoric
from European central banks and ahead of a slew of U.S. and
Mainland Chinese markets were relatively more subdued, with
property-related sectors buoying index gains as investors
welcomed a report in official media on long-term efforts to
control home prices.
At midday, the CSI300 of the leading Shanghai and
Shenzhen A-share listings was up 0.6 percent, while the Shanghai
Composite Index rose 0.2 percent. On the week, they are
each up 1.6 percent, headed for their first weekly gain in five.
The Hang Seng Index, which hit a one-week low on
Wednesday, was up 1.5 percent at 20,766.6 points. The China
Enterprises Index of the top Chinese listings in Hong
Kong climbed 1.9 percent.
On the week, they are now down 0.2 and 1.3 percent,
respectively. Both have had losses in six out of the previous
But turnover in Hong Kong was again weak with the United
States coming off the Independence Day holiday and with
non-farms payroll due later on Friday, which investors are
watching for clues on the anticipated tapering of the Federal
Reserve's monetary easing.
Short selling interest accounted for 6.6 percent of total
turnover at midday, after having stayed above 10 percent for
more than two weeks, versus a historical 8 percent average.
"There's definitely some more short covering today in Hong
Kong ahead of the U.S. data later today and China data next
week," said Larry Jiang, chief strategist at Guotai Junan
"But if Temasek's statement yesterday is anything to go by,
there's definitely some institutional buying after recent
weakness. It's not possible for people to meet their investment
goals otherwise," Jiang added.
Singapore state investor Temasek Holdings Pte Ltd
stood by its investments in China's top banks on Thursday,
saying they were well equipped to cope with disruptions such as
the recent interbank credit crunch.
It also said structural change in China could yield further
investment opportunities, both in state-owned enterprises and
Chinese coal counters, which most regard unfavourably as
China aims to moves from low to high-quality growth and more
environmentally friendly sources of energy, led index gains on
the Hong Kong for a second day after slumping to 2008 lows on
China Shenhua Energy followed Thursday's 5.5
percent rise with a 6.7 percent gain in Hong Kong, with traders
attributing the bulk of flows to short covering. Shenhua is
still down nearly 40 percent on the year, compared to the 8.3
percent slide on the Hang Seng Index.
Shenhua's H-share listing is currently trading at 6.4 times
forward 12-month earnings, a record low and a 49 percent
discount to its historical median, according to Thomson Reuters
Shares of China Rongsheng Heavy Industries plunged
13.2 percent to a record low after the country's largest private
shipbuilder said it had sought financial help from the Chinese
government and big shareholders after downsizing its workforce
and delaying payments to suppliers.
CHINA PROPERTY SHINES
The Chinese property sector was another outperformer ahead
of June China economic data next week. New loan growth and money
supply is due from Monday, inflation on Tuesday and trade on
Second quarter GDP is expected on July 15, as is data for
monthly industrial output, urban investment and retail sales.
China Vanke jumped 4.1 percent in Shenzhen after
the country's largest property developer by sales managed to
maintain flat monthly sales despite Beijing's efforts to cool
the housing market.
The official Shanghai Securities News reported on Friday
that China is studying measures including expansion of the
property tax pilot programme as well creation of a nationwide
information network and uniform real estate registration system
to help control home prices.