* CSI300 +0.5 pct to six-month high, financials lead
* Financial stocks lead macro-economic confidence
* Tally on firm footing as idle money enters market-analysts
* HSI touches 18-month high, then retreats
By Gabriel Wildau
SHANGHAI, Jan 15 Mainland shares extended their
five-week rally to reach a fresh six-month high on Tuesday, with
financials again leading the charge, as the large-cap CSI300
index rose 0.5 percent to consolidate its sharp gain
Analysts said that with financial shares in the lead, the
Shanghai composite index, which sailed past the
psychological 2,300-point barrier on Monday, could face little
resistance until 2,500. Financials comprise the largest share of
both the composite and large-cap indexes.
Hong Kong also touched an 18-month high but was down
slightly by midday, with the benchmark Hang Seng Index
giving up 0.3 percent against Monday's close by midday.
"Money that was sitting on the sidelines has now been
persuaded that the rally is sustainable," said Zhang Weiguang,
equity analyst at Shanghai Securities.
Investors often use financials as a way to profit from
broad-based macro-economic growth. Monday's 3.8 percent gain in
the CSI300 was fuelled mainly by positive macro-economic
sentiment, following data released late last week showing
stronger-than-expected trade growth and healthy credit creation,
Four of the top five index movers in the CSI300 on Tuesday
were also financials, including Bank of Communications
, which gained 1.0 percent, Minsheng Bank
, up 0.8 percent, and insurer China Pacific, up 2.0
Ping An Insurance led the index, gaining 2.0
percent on top of its 4.2 percent gain on Monday, as investors
regained confidence that HSBC's stake sale would go through as
planned, despite doubts raised last week.
Monday's volume was the heaviest of the year at 145 billion
yuan, adding to the view that the current rally is on a firm
foundation. Liquidity was also strong on Tuesday, reaching 93
billion yuan ($14.95 billion) at midday.
The increased appetite for shares has also been supplemented
by money market rates that have fallen sharply since the
beginning of the year.
The benchmark weighted-average seven-day bond repurchase
rate stood at 2.82 percent near midday on Tuesday,
well below the 3 percent mark that generally signals loose
conditions. That's down from 4.58 percent at end-December.
Also supporting the market on Monday were comments from the
chairman of China's securities regulator that quotas for foreign
investment, which currently total only about 1.5 percent of
total market capitalisation, could be raised by nine or ten
HONG KONG SHARES SLIDE
The Hang Seng Index rose more than a 100 points to 23,516,
its highest since June 2011, before the index slid to 23,336 at
0334 midday, down 0.3 percent.
Property shares were under pressure, with China Overseas
Land sliding nearly 2 percent, dragging the property
subindex down 0.2 percent.
The China Enterprises Index of the top Chinese
listings in Hong Kong eased 0.2 percent with Great Wall Motor
losing 4 percent and Air China easing 1.5
"The underlying sentiment is still positive with sufficient
liquidity in the market. Investors are still looking for fresh
buying incentives in consolidating market," said Patrick Yiu, a
director at CASH Asset Management.
Shares of Li & Fung Ltd remained under pressure
after Moody's changed the global supply chain manager's rating
outlook to negative and investors questioned the credibility of
earnings guidance from the company after it flagged a steep
profit fall just two months after an analyst briefing.
Li & Fung's stocks fell to as low as HK$11.32, the lowest
since August 2011, before steadying at HK$11.54, down 1.7
Shares of China Taiping Insurance Holdings Co Ltd
rose 4.5 percent after the China's fifth-biggest mainland
insurer by market capitalisation said it was considering
acquiring an additional 25 percent stake in Taiping Life
Insurance from its parent company.