* HSI +0.6 pct, H-shares +1.4 pct, CSI300 +3.3 pct
* Shanghai Comp up 2.9 pct, back above 100-day MA
* Chinese financials lead A-share charge
By Clement Tan and Vikram Subhedar
HONG KONG, Dec 14 China shares surged on Friday,
rooted in speculation of new state-backed buying in mainland
markets and boosted by a business survey raising hopes for
stronger recovery in the world's second largest economy.
Hong Kong stocks were lifted to a 16-month high, helped by
the 14-month high for the HSBC flash purchasing managers' index
for December, announced shortly after markets opened.
The Hang Seng Index went into the midday trading
break up 0.6 percent at 22,579.2, its highest since Aug. 2,
2011. The China Enterprises Index of the top Chinese
listings in Hong Kong climbed 1.4 percent.
In the mainland, the CSI300 of the top Shanghai
and Shenzhen listings jumped 2.9 percent, while the Shanghai
Composite Index soared 3.3 percent. Both indexes were at
their highest in more than a month.
While markets inched higher immediately following the flash
PMI, talk among traders that large institutions were active
buyers of domestic shares triggered a sharp rally with the
Shanghai Composite punching above its 100-day moving average for
the first time since May.
"With just over 10 trading days remaining in the year, this
is the last window for fund managers to step into the market to
ride on this rally, particularly since most of them were
underweight equities," said Hong Hao, chief strategist at Bank
of Communications International Securities.
On Friday, the Shanghai financial sub-index was up
4.2 percent, with Industrial and Commercial Bank of China (ICBC)
rising 3 percent, shaving its fall in 2012
fall to about 4 percent. In Hong Kong, ICBC inched up 0.4
Shares of Ping An Insurance in Shanghai
were set for their best day in six months, surging 5.8 percent
to extend 2012 gains to 19.4 percent. Its Hong Kong shares were
up 2.6 percent.
The strong showing in the A-share market also helped Chinese
brokerages. In Hong Kong, Haitong Securities jumped
6.6 percent, while Citic Securities rose 3.9 percent.
Mainland investors were also encouraged by several
The state-run China Securities Journal reported on Friday
that the China Securities Regulatory Commission is encouraging
the more than 800 listing applicants to seek alternate sources
of funding in the bond market.
The regulator will also hold listing sponsors responsible if
they "over package" stock offerings in a move aimed at
protecting investors' interest, the same media report said.
New rules announced on Thursday will allow fund houses to
seek regulatory approval for any number of mutual fund products
they wish to sell at any time with the securities regulator
responding within 20 days.
Traders also cited news reports of further relaxation of
quotas for foreigners to invest in China, allowing for a bigger
proportion for stocks. That could improve liquidity conditions
for the A-share market, which has underperformed Hong Kong.
PLACEMENTS GALORE IN HK
The CSI300 and Shanghai Composite indexes, both of which
fell in 2010 and 2011, are down 1.3 and 3.6 percent respectively
this year. In 2012, the Hang Seng is up 22.5 percent and the
China Enterprises index is up 13.7 percent.
A liquidity-fuelled rally in Hong Kong has spurred more
companies to take to the market to raise funds.
On Friday, China Longyuan Power Group dived 6
percent to HK$5.20, hovering at the top end of the HK$5 to 5.20
range the wind power generator priced its HK$2.42 billion ($312
million) new share offering.