* HSI +0.3 pct, H-shares +0.6 pct, CSI300 -0.6 pct
* Kweichow Moutai nears 3-1/2 year low after more
* Cement producers lifted by two positive profit alerts
* ChiNext hits record high, more gains possible: BoComm
By Clement Tan
HONG KONG, Jan 15 China shares again
underperformed most of Asia early on Wednesday, limiting gains
in Hong Kong, after weaker-than-expected money supply and loan
growth data deepened concerns about tightening liquidity in the
The data added to fears of further cash squeezes in the
country's money markets after regulators announced the
resumption of initial public offerings.
With a backlog of more than 700 IPO applications and about
50 approved so far, investors have frowned at the prospect of
increased competition for limited funds with the resumption of
A-share initial public offerings after a halt of more than a
year. Larger offerings could lock up considerable amounts of
capital from time to time.
At midday, the Hang Seng Index was up 0.3 percent at
22,862.7 points, sticking to the same 320-point trading range it
has been locked in for nearly two weeks. The China Enterprises
Index of the leading offshore Chinese listings in Hong
Kong rose 0.6 percent.
The Shanghai Composite Index and the CSI300
of the biggest Shanghai and Shenzhen A-share listings
each shed 0.6 percent. They are now down 4.8 and 5.6 percent,
respectively, since the start of the year.
Instead, investors have continued piling into small cap
stocks. The ChiNext Composite Index of mainly
startups in technology and other nascent industries listed in
Shenzhen climbed 0.7 percent to a record high. It is now up
nearly 7 percent this year after surging 75 percent in 2013.
"In this kind of tight liquidity situation, this divergence
could get even more pronounced. It's far easier to maximise
returns in small caps with less money," said Hong Hao, chief
equity strategist at Bank of Communication International.
Financials led declines following the credit data.
On Wednesday, Industrial and Commercial Bank of China (ICBC)
, which slipped 0.6 percent on Tuesday, sank another
2.3 percent in Shanghai to its lowest since end-June. Its Hong
Kong listing inched up 0.2 percent, but is still
hovering at a five-month low.
The official China Securities Journal had reported on
Tuesday that the country's largest lender is planning to sell
100 billion yuan worth of negotiable certificates of deposits
this year, another step towards interest rate reform which may
crimp net interest margins for the country's biggest lenders.
Chinese banks made 482.5 billion yuan ($79.9 billion) worth
of new yuan loans in December, lower than a forecast of 600
billion yuan and lower than the previous month's 624.6 billion
yuan, central bank data showed on Wednesday.
Brokerages were also weaker after three small Chinese
companies decided to sell shares at valuations much lower than
those of peers, just days after the securities regulator issued
a new rule to prevent excessive stock pricing.
Haitong Securities sank 1.2 percent in
Hong Kong and 1.7 percent in Shanghai. The China Securities
Regulatory Commission (CSRC) on Sunday said companies pricing
shares at a premium to those of peers must delay sales by three
weeks to publish risk warnings.
Premium Chinese liquor producer Kweichow Moutai
sank 2 percent, nearing a 3-1/2-year low trough, after Chinese
President Xi Jinping said late on Tuesday that corruption is a
grim and complicated problem that needs to be solved quickly
with "drastic medicine".
Chinese liquor makers have been hit hard by government
efforts to cut down on lavish spending by officials.
There were gains, however, for Chinese cement producers.
Positive profit alerts from Anhui Conch Cement
and China Resources Cement
spurred some short covering in Hong Kong that also buoyed other
Chinese cement producer counters.
Anhui Conch Cement shares climbed 4.6 percent in Hong Kong
and 2.2 percent in Shanghai after the company said it expects
2013 net profit to jump about 50 percent from a year earlier on
improving market demand and as lower coal prices reduced
Based on current cement prices, which went up on average 13
and 24 percent respectively in East and Central China in the
fourth quarter last year, Conch could issue another positive
alert for the first quarter of 2014, Jefferies analysts said in
a client note dated Tuesday.
They expect a few other companies in the sector to follow
suit with positive profit alerts. China Resources Cement spiked
6.3 percent, while China National Building Material
rebounded 4.6 percent after closing on Tuesday at its lowest in
nearly 10 weeks.