* HSI -1.4 pct, H-shares -1.8 pct, CSI300 -0.6 pct
* Banks lead slide, H-shares unwind Wednesday gains
* CITIC Securities hit by pledge to open up brokerage sector
* Inner Mongolia Yili spikes on 80 percent profit alert
By Clement Tan
HONG KONG, Jan 23 Hong Kong shares sank to their
lowest level in over a week on Thursday, led by the Chinese
financial sector, after a private preliminary survey showed
factory activity shrank slightly in the world's second-largest
economy in January.
The A-share market was relatively more resilient after the
central bank injected another 120 billion yuan ($19.83 billion)
through 21-day reverse bond repurchase agreements at the second
of two scheduled weekly open market operations.
By midday, the CSI300 of the largest Shanghai and
Shenzhen A-share listings was down 0.6 percent, while the
Shanghai Composite Index slipped 0.5 percent. Both
posted their biggest daily gain in two months on Wednesday and
closed at their highest in more than two weeks.
The ChiNext Composite Index of startups in
mainly nascent industries listed in Shenzhen outperformed,
jumping 1.7 percent to yet-another record high.
The Hang Seng Index fell 1.4 percent to 22,766.3
points, its lowest intra-day level since Jan. 14. The China
Enterprises Index of the leading offshore Chinese
listings in Hong Kong sank 1.8 percent.
Losses for the H-share index erased Wednesday's gains, which
had came on the back of a gigantic cash injection by the
People's Bank of China that calmed money markets in the mainland
earlier in the week.
Volumes in Hong Kong and mainland markets were overall less
robust than Wednesday.
The flash Markit/HSBC Purchasing Managers' Index fell to
49.6 in January from December's final reading of 50.5, dropping
below the 50 line which separates expansion of activity from
contraction for the first time in six months.
"The weak flash PMI will inevitably inflame China slowdown
worries, but this is only one data point," said Linus Yip, a
strategist with First Shanghai Securities in Hong Kong.
"If more data start to also show a deeper slowdown, Beijing
may be forced to stimulate in order to maintain a stable basis
for growth that they need to execute reforms," Yip added.
China has created six teams to supervise its boldest
economic and social changes in 30 years, with President Xi
Jinping and Premier Li Keqiang personally taking charge, state
media said on Wednesday.
The Chinese banking sector weighed heaviest on indexes.
Industrial and Commercial Bank of China H-shares,
which closed on Wednesday at the highest in two weeks, sank 2.6
In Shanghai, mid-sized lenders Minsheng Bank and
Industrial Bank each slid more than 1 percent to
trim weekly gains after the PBOC injected a net 375 billion yuan
into the market this week, its largest weekly injection in
nearly a year.
The banking sector has also been pulled lower by concerns of
a possible default of a trust product that ICBC had helped to
China Credit Trust Co Ltd, whose product could set a
landmark precedent for default in China's fast-growing shadow
bank sector, said it is in discussions with new investors in an
effort to raise the funds necessary to pay off current investors
when the high-yielding product matures on Jan. 31.
CITIC Securities tumbled 4 percent in
Hong Kong and 1.5 percent in Shanghai after the chairman of the
China Securities Regulatory Commission said the country will aim
to limit the stakes foreign firms can take in local securities
institutions, while permitting them to set up wholly owned
With the next corporate earnings reporting season due to
kick off at the end of February, companies are obligated by
exchanges to issue profit-loss advisories.
Esprit Holdings pared early gains to go into the
lunch break up 1.2 percent after the struggling clothing
retailer said it expects to return to profit in the first half
of the business year as efforts to cut costs kick in.
The Macau casino sector extended losses, with Sands China
diving nearly 3 percent and Galaxy Entertainment
sliding 2 percent. JP Morgan had on Wednesday
downgraded the sector, advising clients to take some profit on
its strong share price rally ahead of earnings.
There were gains for the shares of Inner Mongolia Yili
, which jumped 4.7 percent in Shanghai after the
dairy producer said it expects 2013 net profit to surge by about
80 percent from a year earlier.