* HSI +0.1 pct, H-shares +0.3 pct, CSI300 -0.7 pct
* Shanghai Composite down 1 pct, below 2,000 points
* Sany at lowest in a year, shrugging off industrial profits
* CRE at 6-mth high on reported interest in Carrefour
By Clement Tan and Vikram Subhedar
HONG KONG, Nov 27 Onshore Chinese shares
stumbled towards their lowest since 2009 on Tuesday, dragged by
weakness in growth-sensitive companies and limiting gains in
Hong Kong on fears that growth in China could be compromised by
banks' limited lending capacity.
The Hang Seng Index rose 0.1 percent by the midday
break, while the China Enterprises Index of the top
Chinese listings in Hong Kong was up 0.2 percent. Midday bourse
turnover was at the highest since Nov. 15.
In the mainland, the CSI300 of the top Shanghai
and Shenzhen listings shed 0.7 percent, while the Shanghai
Composite Index was down 1 percent in the highest midday
volume in two weeks. Both are now near their lowest since early
If losses persists, it will be the first time since January
2009 that the Shanghai Composite Index closes below the 2,000
mark. In November to date, it has lost 3.4 percent, while the
CSI300 slid 4.2 percent, compared to the 0.1 percent gain for
the China Enterprises Index.
"This divergence between A and H share performance will
continue at least until the year's end. There is a long list of
A-share IPOs waiting for approval and that's not going to
impress investors," said Larry Jiang, chief strategist at Guotai
Junan International Securities.
On Tuesday, industrial counters were weak in the mainland
despite official data from the National Bureau of Statistics
showing Chinese industrials returning to profit growth in
Shanghai-listed Sany Heavy Industry declined 2.6
percent to its lowest since September 2010.
Over the past month analysts have cut forward 12-month
earnings forecasts for MSCI China industrials by 2.7 percent,
the sixth straight month of cuts, according to Thomson Reuters
Much of the bearishness on the day stemmed from a report in
the state-run China Securities Journal newspaper that Basel III
requirements could raise the capital adequacy ratio at the
country's six biggest banks by up to 50 basis points,
potentially limiting their capacity to lend.
The banking sector was mixed in mainland markets, with
Industrial and Commercial Bank of China (ICBC) and
Bank of China, among the six banks named, slipping
0.3 and 0.4 percent, respectively.
Investors can now turn to China's annual Central Economic
Work Conference, which is typically held in mid-December, for
clues on the tone of economic policies in 2013.
The China Securities Journal also reported on Tuesday that
China is likely to target growth of 7 to 7.5 percent and
expected to maintain their proactive position on fiscal policy
and stay prudent on monetary policy -- denting hopes for more
aggressive policy easing.
HONG KONG UP, BARELY
But in Hong Kong, the Chinese banking sector was broadly
higher. ICBC was up 0.4 percent, while Bank of
Communications gained 0.9 percent.
China Resources Enterprises (CRE) led percentage
gains among Hang Seng Index components, rising 2.2 percent to a
six-month high on media reports that it plans to purchase a
stake in French retailer Carrefour SA.
After rebounding 3.7 percent from a Nov. 15 low, the Hang
Seng Index is now just 1.3 percent from Monday's close to 2012
intra-day highs, set on Nov. 2.
"In Hong Kong, the current high for the year will likely cap
gains for the year," Guotai Junan's Jiang said.
"Investors will be looking to lock in profits as we head
into year's end and are looking for signs of policy reforms in
China before committing to the next leg up," Jiang added.