(Updates to close)
* HSI +0.5 pct, H-shares +0.9 pct, CSI300 flat
* BOC leads Chinese banking rise in HK after UBS upgrade
* MGM China jumps after govt approves new casino
* A-share market cheers reported China IPO overhaul
By Clement Tan
HONG KONG, Jan 9 Hong Kong shares bounced from
their lowest in a week on Wednesday, resuming a
start-of-the-year rally that had benchmark indexes headed
towards multi-month highs, with Chinese banks stronger following
a brokerage upgrade.
Mainland Chinese markets pared losses after Reuters reported
that the mainland IPO market could be frozen until the end of
March, reducing concerns of an oversupply of new shares
competing for limited funds in the A-share market.
The Hang Seng Index rose 0.5 percent to 23,218.5,
with chart resistance next seen at 19-month highs set last
Thursday at about 23,400 points. Hong Kong turnover was the
lowest so far this year.
The China Enterprises Index of the top Chinese
listings in Hong Kong climbed 0.9 percent after its worst daily
loss in two months on Tuesday had sent the H-shares index to its
lowest since Jan. 2.
In the mainland, the Shanghai Composite Index and
CSI300 both ended flat, hovering near its highest
since mid-June after a strong December surge. Shanghai bourse
volumes stayed robust as investors rotated into laggards.
"We are running into chart resistance now, so investors are
looking to rotate into laggards. There is no need to be too
bearish right now, at least in the first quarter," said Hong
Hao, Bank of Communications International Securities' chief
On Wednesday, Bank of China (BOC) climbed 1.1
percent to HK$3.59 after UBS raised its price target by 31
percent from HK$3.05 to HK$4, citing its attractive valuation
with BOC the least expensive among the larger H-share banks.
UBS analysts said that BOC's off-balance sheet wealth
management products (WMP) is the lowest among bigger Chinese
banks. BOC is the country's fourth-largest bank.
"Regulatory scrutiny on WMP is likely to mitigate systemic
risk, at the expense of the banks' rising embedded losses and
the crowding out effect on small and medium enterprise lending,"
UBS analysts said in a separate broader report on the Chinese
banking sector dated Jan. 8.
Chinese banks were among the top boosts to the Hang Seng
Index. Other than BOC, Industrial and Commercial Bank of China
(ICBC) rose 0.9 percent in Hong Kong after UBS raised
its target price by almost 21 percent. Its Shanghai listing
gained 0.2 percent.
Still, gains for both BOC and ICBC in Hong Kong came in
elevated short selling interest, accounting for about 19 percent
of their respectively turnover on the day, according to traders,
suggesting scepticism remains on the Chinese banking sector.
ICBC shares have rallied about 40 percent in Hong Kong from
a trough on Sept. 5, while BOC have jumped about 30 percent.
China Railway Group jumped 5.1 percent to close at
its highest since April 2011 after JP Morgan raised its target
price for its Hong Kong listing by about 41 percent, extending
the time horizon for the target to December this year.
According to Thomson Reuters StarMine, JP Morgan's Karen Li
is among the five most accurate analysts in forecasting China
Railway Group's earnings.
MGM China shares spiked 7 percent to their highest
close since August 2011, outperforming Macau sector rivals,
after the company received government approval for a $2.5
billion Macau casino.
A-SHARES STEADY AHEAD OF THURSDAY DATA
Onshore Chinese markets hovered at near seven-month highs,
with gains in alcohol producers offset by lingering weakness in
the financial sector ahead of a fresh batch of data that should
feed expectations of a recovery in the world's second-largest
Both onshore indexes were headed for losses on the day until
Reuters reported about 20 minutes before market close that
China's securities regulator is requiring underwriters and
auditors of all applicants for A-shares initial public offerings
to review their financial statements to make sure they are in
Beijing is expected to post December trade data on Thursday
and monthly inflation data on Friday, with quarterly foreign
reserve data and monthly loan growth and money supply data by
Kweichow Moutai rose 2.7 percent to near its
highest in about two weeks, continuing its recovery from a Dec.
6 trough. Moutai shares slumped 12.7 percent in November, its
worst monthly loss since April 2010.
On Wednesday, investors cheered more news reports of the
bigger producer of Chinese premium white spirits cracking down
on suppliers reducing prices ahead of the Chinese New Year in
China insurers were weak again in the onshore markets, with
Ping An Insurance declining 0.9 percent after losing
3.7 percent on Tuesday in its worst single day loss since Oct.
Zoomlion Heavy Industry tumbled 6.4
percent in Hong Kong and 3.2 percent in Shenzhen, despite the
company's denial of a Hong Kong media report concerning
(Editing by Simon Cameron-Moore)