* HSI -1.1 pct, H-shares -0.9 pct, CSI300 +0.1 pct
* China banks hit by new liquidity regulations
* Sinopec lifted by plan for private investment in marketing
* Tencent sinks after Facebook's WhatsApp deal
* MGM China spikes on robust 2013 earnings, special dividend
By Clement Tan
HONG KONG, Feb 20 Hong Kong shares fell from a
four-week high early on Thursday, and losses accelerated after a
preliminary private survey showed manufacturing activity in
China slowed to a seven-month low, stoking fears of a more
The China flash Markit/HSBC Purchasing Managers' Index (PMI)
declined to 48.3 in February from January's final reading of
49.5. The employment sub-index slid to its weakest in four
At midday, the Hang Seng Index was down 1.1 percent
at 22,412.8 points after closing on Wednesday at its highest
since Jan. 23. The China Enterprises Index of the
leading offshore Chinese listings slid 0.9 percent.
The CSI300 of the largest Shanghai and Shenzhen
A-share listings inched up 0.1 percent, while the Shanghai
Composite Index was up 0.7 percent after rising by as
much as 1.7 percent before the survey's release.
"The survey today is a further sign of a slowdown in the
Chinese economy after last month's set of PMIs, but the market
reaction is not that bad," said Linus Yip, a Hong Kong-based
strategist at First Shanghai Securities.
"The upcoming annual parliamentary meetings in early March
will take on bigger importance now," Yip added. "You have to
expect Beijing to act if the economy slows down more from here,
because they cannot proceed with their reform agenda without
maintaining a certain level of growth."
Chinese banking plays were among the leading drags on
benchmark indexes. Industrial and Commercial Bank of China
slid nearly 3 percent in Hong Kong and 0.6
percent in Shanghai.
The sector was also hit by a directive from the banking
regulator late on Wednesday reiterated that banks must raise
their liquidity coverage ratio, a barometer gauging their
short-term resilience to high-stress situations, to 100 percent
by 2018 under new rules effective March 1.
Bank of Beijing was an exception to Thursday's
trend, rising another 2.8 percent after saying it would
collaborate with Xiaomi.com in mobile payment and credit. It
soared 10 percent on Wednesday on initial reports of this
arrangement, and a formal announcement was made after market
Tencent Holdings sank 2.3 percent on fears of
greater competition after Facebook Inc announced its
purchase of mobile-messaging startup WhatsApp for $19 billion in
cash and stock.
The Chinese internet giant has also been on an acquisition
spree, having announced late on Wednesday the purchase of 20
percent in Dianping, China's largest restaurant review and
business listing site.
There were also gains for China Petroleum and Chemical Corp
(Sinopec) , whose shares surged by the
maximum 10 percent in Shanghai and 9.6 percent in Hong Kong.
Investors cheered a plan to seek private investment for its
"We believe management is exploring the possibility of
spinning off the division in an IPO or sale of a stake, with an
eye to unlock the value of the division which is not fairly
reflected in the share price of Sinopec," Citi analysts said in
a client note dated Feb. 19.
Other petrochemical counters were also buoyed by Sinopec
gains. Petrochina jumped more than 2
percent in Hong Kong and 4.9 percent in Shanghai.
MGM China spiked 4.5 percent after the Macau
casino operator announced a 17.7 percent rise in full-year 2013
net profit and declared a special dividend of HK$1.02 ($0.13)