* 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 too
* China property developers sink, pare strong Thursday rebound
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 People's Congress.
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 parliamentary meetings.
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 valuation.
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 historical median.
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.