* HSI -0.2 pct, H-shares +0.5 pct, CSI300 -0.2 pct
* Most indexes headed for losses on the week
* Investors cheer Sinopec chairman comments, lift PetroChina
* China property developers sink, pare strong Thursday
By Clement Tan
HONG KONG, March 7 Chinese oil giants Sinopec
and PetroChina outperformed the broader Hong Kong and China
stock markets early on Friday, on hopes that both companies will
be beneficiaries of policy reforms at the ongoing National
Major benchmark indexes are mostly headed for losses on the
week, with investors also bracing for a possible first default
of a publicly traded bond in the mainland by loss-making Chinese
solar equipment producer Chaori Solar.
At midday, the CSI300 of the leading Shanghai and
Shenzhen A-share listings was down 0.2 percent, while the
Shanghai Composite Index was flat. On the week, they are
now down 0.4 and up 0.2 percent, respectively.
The Hang Seng Index slipped 0.2 percent to 22,661.3
points, while the China Enterprises Index of the leading
offshore Chinese listings in Hong Kong rose 0.5 percent. On the
week, they are now down 0.8 and 1.7 percent, respectively.
"We are in the middle of the annual parliamentary meetings
right now, so the market is very susceptible to big price moves
on the slightest of hints or hopes," said Linus Yip, a
strategist at First Shanghai Securities.
Demonstrating jittery conditions, Chinese property
developers slid on Friday after a robust rebound on Thursday on
optimism that no new curbs will be announced during the annual
Country Garden sank 3.7 percent in Hong Kong,
while Poly Real Estate shed 1.6 percent. China Vanke
outperformed, slipping 0.3 percent in Shenzhen after
posting net profits that were in line with expectations.
China Petroleum and Chemical Corp (Sinopec)
jumped 2.9 percent in Shanghai and 2.7
percent in Hong Kong, while PetroChina
climbed 2 percent in Shanghai and 0.7 percent in Hong Kong.
The official Xinhua news agency cited PetroChina Chairman
Zhou Jiping as saying that the country's top oil and gas
producer plans to ink production-sharing contracts with a range
of social and private investors.
Sinopec, Asia's largest oil refiner, announced late month
plans to sell up to 30 percent of its retail oil business to
private investors in a multibillion dollar restructuring aimed
at boosting the value of its sprawling downstream arm.
That move was seen as the first concrete signs of ownership
reforms at China's state-owned enterprises. Sinopec president Fu
Chengyu told state broadcaster CCTV on Thursday that the
proposed stake sale in its marketing subsidiary could likely
involve private international investors.
He added Sinopec is not looking for an injection of capital,
suggesting strategic partnerships are more likely, particularly
in the area of shale gas development. Fu also said there is no
strict limit on the participation of non-state investors.
Credit Suisse analysts said in a note dated Friday that this
is a "huge step forward" in the restructuring of Sinopec's
marketing segment that will likely trigger a re-rating of its
Sinopec H-shares have surged 20 percent from a Feb. 10 low
and are now up 9.5 percent for the year after falling 6.3
percent in 2013, compared with a 10 percent slide this year and
5.4 percent decline in 2013 on the China Enterprises Index.
Sinopec H-shares are now trading at 8.2 times forward
12-month earnings, a 2 percent premium to the historical median,
according to Thomson Reuters StarMine. They are trading at 1
time price-to-book, which is a 19 percent discount to the
Ten out of 30 analysts have downgraded their
earnings-per-share estimates for Sinopec by an average of 1.8
percent in the last 30 days, according to StarMine. The company
is due to report 2013 full-year earnings on March 21.
China Mengniu Dairy rose 1.2 percent and BYD Co
Ltd jumped 4.4 percent ahead of their inclusion on the
Hang Seng Index and China Enterprises Index, respectively, after
markets shut on Friday.
They will replace China Coal, whose H-shares shed
0.5 percent, and Zoomlion Heavy Industry, whose
H-shares declined 2.4 percent.