* HSI -0.6 pct, H-shares -1.5 pct, CSI300 -2.3 pct
* Weak HSBC China flash services PMI adds to data gloom
* Financials, property-related, railway lead losses
By Clement Tan
HONG KONG, Jan 6 China shares touched five-month
lows early on Monday, weighing on Hong Kong markets, after a
survey showing weak services sector growth in the mainland added
to concerns of slowing growth.
Both markets have now erased gains from a key policy meeting
in November that was seen as Beijing's boldest commitment to
reform in decades. Investors are now counting the cost of those
reforms, which they fear will involve a deeper crackdown on
shadow banking as Beijing reins in credit growth.
There are also rising concerns that the resumption of
initial public offerings in the mainland -- with nearly 30
approved so far -- will further sap tight money supply. Rates
are expected to stay elevated ahead of the Lunar New Year, which
falls at the end of January.
At midday, the CSI300 of the leading Shanghai and
Shenzhen A-share listings was down 2.3 percent. The Shanghai
Composite Index sank 1.9 percent. Both are now
languishing at their lowest since August.
The Hang Seng Index shed 0.6 percent to 22,680.8
points, while the China Enterprises Index of the top
offshore Chinese listings in Hong Kong slid 1.5 percent and is
now at its most technically oversold level since July.
Losses in both markets came in relatively robust volumes. In
Shanghai, about 12 stocks declined for every counter that rose,
while about 4 stocks fell for every stock that advanced.
"I think it's quite clear this is not yet the bottom.
There's going to be more losses ahead," said Hong Hao, chief
strategist at Bank of Communication International.
On Monday, China Construction Bank (CCB)
sank 1.4 percent in Hong Kong and 2.5
percent in Shanghai. Both its A and H-share listings have now
tumbled more than 11 percent from December peaks.
Calls for China to accelerate financial reforms grew louder
last week after figures showed its indebted local governments
owe nearly $3 trillion in a debt build-up that some analysts
The HSBC/Markit services sector Purchasing Managers' Index
(PMI) dropped to 50.9 in December from 52.5 in November -- its
lowest since August 2011 -- with new business expansion the
slowest in six months.
Chinese property-related and railway sectors were standout
underperformers, while there were gains for the Macau casino and
Chinese Internet sectors.
China Vanke slid 4.3 percent in Shenzhen to its
lowest since February 2012, while Poly Real Estate
tumbled 5.1 percent in Shanghai to a more than two-year trough.
In Hong Kong, China Overseas Land fell 2.6 percent.
Authorities had announced moves to streamline mortgage
financing provided by the country's Housing Provident Fund.
Revisions in second-tier Wuhan city closed a previous loop-hole
on mortgages on second homes, according to a client note from
Deutsche Bank dated Jan. 3.
China Railway Group tumbled 5.4 percent
in Hong Kong and 4.6 percent in Shanghai. The official Xinhua
news agency reported on Sunday that its president had passed
In Hong Kong, Galaxy Entertainment climbed 1.3
percent to a record high, while Tencent Holdings rose
Wing Hang Bank shed 1.4 percent before trading in
its shares were suspended in late morning. Reuters had reported
on Friday that Singapore's Oversea-Chinese Banking Corp (OCBC)
had begun exclusive talks to purchase the Hong Kong
family-run lender at about $5.3 billion.