* HSI +0.7 pct, H-shares +0.8 pct, CSI300 -0.2 pct
* China Shenhua climbs on news of Australia interest
* Esprit slumps, profit warning triggers downgrades
* China property weak again in the mainland
By Clement Tan
HONG KONG, Dec 19 Hong Kong shares touched a
17-month high on Wednesday, buoyed by renewed hopes of a deal in
the U.S. on spending cuts and tax hikes, but looming chart
resistance could limit a market rally into the year's end.
Weakness in property stocks, standout outperformers this
year, dragged mainland markets into the red. A fourth monthly
price increase in five for home prices, on top of Beijing's
reiteration that curbs will remain in place in 2013, has hurt
the sector this week.
The Hang Seng Index went into the midday trading
break up 0.7 percent at 22,652.8, its highest intra-day level
since Aug. 1, 2011. Stiff chart resistance is next seen at about
22,800, peaks reached in July-August 2011.
The China Enterprises Index of the top Chinese
listings in Hong Kong climbed 0.8 percent to its highest since
March 12. It is now up 14.7 percent on the year, compared with
the 22.9 percent jump on the Hang Seng Index.
In the mainland, the Shanghai Composite Index and
CSI300 of the top Chinese listings both slipped 0.2
percent. Shanghai midday volume was its lowest since last
The CSI300 has bounced up 12 percent since Dec. 3, when it
was at its lowest since early 2009. The index, which fell in
both 2010 and 2011, is now up 0.7 percent on the year. The
Shanghai Composite is down 1.8 percent in 2012.
"I won't be surprised if turnover drops off as we close out
2012 and people go on holiday, stalling the rally. Most
investors are already looking to the new year," said Edward
Huang, Haitong International Securities' equity strategist.
"I think the market might be too optimistic on the pace of
reform or additional policy support that the incoming Chinese
leadership will take in 2013," Huang added.
On Wednesday, Chinese banking and energy majors were among
the biggest boosts to the Hang Seng Index. The mainland's two
largest banks, Industrial and Commercial Bank of China (ICBC)
and China Construction Bank (CCB) rose 0.9
and 1.3 percent respectively.
China Shenhua Energy Co Ltd climbed 2.6
percent to its highest in a month in Hong Kong and 0.8 percent
The Australian Financial Review reported that China's
biggest coal producer was told to come back with a full takeover
offer after it had talked to Australia's Whitehaven Coal
about taking a stake.
Chinese property shares in the onshore market were weak
again, although those listed in Hong Kong rebounded after two
days of falls.
Poly Real Estate shed 1.5 percent in Shanghai,
but China Resources Land rose 1.7 percent in Hong
ESPRIT TAKES A TUMBLE
Bucking broader market strength, Esprit Holdings
tumbled 5.7 percent to its lowest since Nov. 14, shaving 2012
gains to 19 percent after the Europe-focused retailer warned of
a possible loss for the six months ending in December,
triggering a raft of broker downgrades.
Morgan Stanley downgraded Esprit to "underweight" from
"equal weight" while revising its earnings forecast for the year
ending in June 2013 to a net loss of HK$144 million from the
previous HK$695 million profit.