* HSI up 0.2 pct on the day, up 0.7 pct on the week
* CSI300 up 1.5 pct on Friday, up 4.6 pct this week
* Time to rotate into laggard cyclicals - BoComm strategist
* Belle gains on reported new measures to lift consumption
* Citic Securities at record high, CSRC allows sub bonds
By Clement Tan
HONG KONG, Dec 28 Mainland Chinese shares hit
six-month closing highs on Friday, while Hong Kong crept to its
highest close in almost 18 months as investors rotated into
Chinese non-financial counters after Beijing raised hopes of
quicker sector reforms.
Gains on Friday came in reduced turnover in both markets
with benchmark indices confined to recent ranges, suggesting the
rally powered by China growth-related plays this month is
running out of steam as the year winds to a close.
The Hang Seng Index inched up 0.2 percent on the day
and 0.7 percent on the week to 22,666.6, its highest closing
level since July 8, 2011.
The China Enterprises Index of the top Chinese
listings in Hong Kong rose 0.3 percent on Friday and 1.3 percent
this week, underperforming onshore Chinese peers for a fourth
The CSI300 of the top Shanghai and Shenzhen
listings jumped 4.6 percent this week, while a 3.7 percent spike
nudged the Shanghai Composite Index into positive
territory on the year.
On Friday, they each rose 1.5 and 1.2 percent, hitting their
respective highest closing levels since June 21. Shanghai bourse
volume stayed above its average in the past month, but sank some
10 percent from Thursday.
On the year, the CSI300 is up 5.7, while the Shanghai
Composite Index is 1.5 percent, compared to the Hang Seng
Index's 23 percent rise and the China Enterprises Index's 14.5
"It might be better for people to leave the good quality
names with strong thematic stories for a while in January and
start screening for cyclical names that have lagged the rally in
December," said Hong Hao, chief equity strategist at Bank of
Communications International Securities.
In a sign that may have started to happen, Citic Pacific
rallied 4.3 percent in heavy volumes with the bulk of
gains in afternoon trade. Shares of the beleaguered Chinese
steel-to-property conglomerate in Hong Kong are still down
almost 20 percent on the year.
Chinese non-banking financial counters were broadly stronger
after the China Securities Regulatory Commission said it plans
to allow brokerages to sell subordinated debt to institutional
This follows a pledge from China's central bank to quicken
the pace of reforming and opening up the financial sector in
2013, while preventing systemic risks.
Citic Securities , China's largest
listed brokerage, surged 10.7 percent to a record high in Hong
Kong since its October 2011 debut, while jumping 7.9 percent in
Friday's gains added to Citic Securities' stellar 2012
gains, now up 50.1 percent in Hong Kong and 35.5 percent in
Further boosting sentiment, the official Shanghai Securities
News reported on Friday that the securities regulator is working
on details on lowering requirements for companies to list in
Hong Kong and allowing them to issue corporate bonds to ease
pressure on the onshore Chinese market.
POLICY HOPES PROPEL CONSUMER STRENGTH
Shares of Belle International, a leading
China-focused footwear retailer, gained 3.1 percent after the
state-run China Securities Journal newspaper reported that
Beijing could introduce new measures to boost consumption ahead
of the annual party congress in March.
Gains on Friday helped Belle end at HK$16.88, its highest
close since August 2011 and not far from its record high of
HK$17.54, which was set in July 2011.
Belle is now up 24.7 percent for the year, but is still
trading at an 8 percent discount to its historical 12-month
forward earnings multiple, according to Thomson Reuters
Chinese automakers were also stronger after the sector was
cited in the same China Securities Journal report as a possible
policy reform beneficiary.
SAIC Motor rose 3.6 percent in Shanghai. Warren
Buffett-backed BYD Co Ltd jumped 4.1
percent in Hong Kong and 1.9 percent in Shenzhen.