(Updates to midday)
* HSI down 0.7 pct, CSI300 declines 0.8 pct
* Hutchison weak ahead of H1 earnings after markets close
* PetroChina weak on earnings worries
* Strong defensives, weak turnover flag caution ahead of ECB
By Clement Tan
HONG KONG, Aug 2 Hong Kong shares are poised to
end a five-day winning streak on Thursday, as weakness in oil
giant PetroChina outweighed strength in defensive counters,
pointing to caution ahead of a European Central Bank meeting
later in the day.
Lackluster midday turnover further pointed to risk aversion,
after the U.S. Federal Reserve offered no new measures to
stimulate the economy, giving investors little incentive to
return to the market in a big way.
Mainland Chinese markets also moved lower, with a second
attempt by China's securities regulator in as many days to urge
companies to buy back their shares failing to enthuse sceptical
The Hang Seng Index shed 0.7 percent at 19,678.1,
barely holding above its 200-day moving average now at 19,677.1.
The China Enterprises Index of the top Chinese listings
in Hong Kong bled 1.1 percent.
"It will probably not hold at the 200-day moving average if
ECB disappoints later today. We will probably see some support
at 19,000 from which we rallied about 1,000 points in a week,"
said Alan Lam, Julius Baer's Greater China equity analyst.
The CSI300 Index closed down 0.8 percent at
midday, while the Shanghai Composite Index lost 0.5
percent, both paring gains from Wednesday after the securities
regulator's first attempt at bolstering market sentiment.
Ahead of its interim earnings expected later in the day,
shares of Hong Kong ports-to-telecoms conglomerate Hutchison
Whampoa slipped 1 percent. It is up 5.7 percent in
2012 so far, compared to the Hang Seng Index's 6.7 percent gain.
Prior to Thursday, Hutchison was trading at 12.1 times
forward 12-month earnings, a 40 percent discount to its
historical median, according to Thomson Reuters StarMine.
The Hong Kong utilities sector, seen a popular defensive
play, was strong. Power Assets rose 0.7 percent, while
CLP Holdings gained 0.2 percent.
PETROCHINA LEAD BENCHMARK INDICES LOWER
PetroChina Co Ltd was among the top
drags on benchmark indices in Hong Kong and China on Thursday on
growing worries about their interim earnings expected later in
August, analysts said.
The Chinese oil giant's 2.6 percent loss in Hong Kong pared
its gains from the previous two days. PetroChina also lost 0.3
percent in Shanghai.
Following its first effort on Wednesday to get cash-rich
companies to buy back their own shares to bolster the onshore
Chinese stock markets, the China Securities Regulatory
Commission on Thursday encouraged companies whose share price
has fallen below its net asset value per share to buy back
"I think the market is getting a bit numb to what the CSRC
is trying to do," said Chen Yi, a Shanghai-based analyst with
He added the regulator is limited in what they can do to
bolster market sentiment, saying investors are looking to the
Chinese central bank for more policy easing that will boost
liquidity conditions and economic growth.
(Editing by Jacqueline Wong)