* HSI -0.4 pct, H-shares -0.9 pct, CSI300 -1.1 pct
* China Life Insurance hit by Credit Suisse downgrade
* Evergrande tumbles after HK$4.4 bln new share issue
* ETFs among most shorted in HK, betting on further weakness
By Clement Tan
HONG KONG, Jan 17 Onshore China shares retreated
further from a 7-1/2-month high on Thursday, reversing early
Hong Kong gains, with growth-sensitive counters leading the
slide ahead of a slew of major Chinese economic data being
released on Friday.
The Hang Seng Index went into the midday break down
0.4 percent at 23,271 points after earlier testing chart
resistance at 19-1/2 month highs at about 23,500. This level has
stymied index gains for more than two weeks.
The China Enterprises Index of the top Chinese
listings fell 0.9 percent, outshining mainland markets. The
Shanghai Composite Index and the CSI300 of the
top Shanghai and Shenzhen A-shares each sank 1.1 percent.
If losses persist, this would be their second-straight loss
after they hit their highest since early June on Tuesday.
Both onshore indexes jumped on Monday, partly triggered by
comments from China's chief securities regulator that foreign
investment quotas for A-shares could increase ten-fold from
Hong Kong-listed exchange-traded funds (ETFs) tracking both
onshore and offshore China listings were among the most shorted
at midday, suggesting some investors are betting on more index
"I think people are still just taking profit from the
out-sized jump in the A-share market earlier this week," said
Hong Hao, chief equity strategist at Bank of Communication
"We are early in this rotation into cyclicals at the start
of a new economic cycle in China, so some are still operating as
in a bear market, selling into strength and clocking profits by
rotating swiftly between sectors," Hong added.
Beijing is likely to post a rebound to 7.8 percent growth in
the fourth quarter of 2012 on Friday, its first quarterly rise
in eight. December data for housing prices, urban investment,
industrial output and retail sales are also expected.
On Thursday, China Life Insurance tumbled 2.4
percent in Hong Kong and 3.6 percent in Shanghai despite posting
a 40 percent year on year increase in premium income in
December, lifting growth to 1 percent for 2012.
Hong Kong shares of China's largest insurer were also hurt
by a downgrade from "neutral" to "underweight" by Credit Suisse
analysts on Thursday, who said its high valuation relative to
sector peers is not justified given an unfavorable 2013 outlook.
Thursday's losses almost pared gains on the week for China
Life's Hong Kong listing. It is still up more than 3 percent in
2013 following a 32 percent surge last year. The Hang Seng Index
is up 2.7 percent in 2013 after jumping 22.9 percent in 2012.
According to Thomson Reuters StarMine, China Life is
currently trading at a 0.7 percent premium to its historical
median forward 12-month earnings multiple. Ping An Insurance
, its biggest rival, is currently trading in Hong Kong
at a 32 percent discount.
HONG KONG PROPERTY UP AT CHINA'S EXPENSE
Evergrande tumbled 6.7 percent to HK$4.34,
slightly below the HK$4.35 level at which the Chinese developer
priced one billion new shares on Thursday, which was a 6.5
percent discount to its Wednesday's close.
Thursday's losses took Evergrande to its lowest since Jan.
2, hurting most of its Chinese property sector rivals listed in
Hong Kong. China Resources Land sank 3.1 percent to
its lowest in a week.
Hong Kong property counters saw modest gains after no harsh
property curbs were included in maiden policy speech by the
territory's new chief executive on Wednesday, which instead
announced an increase in land supply.
Sun Hung Kai Properties inched up 0.4 percent to
its highest since April 2011. Henderson Land gained
0.5 percent, stretching gains in 2013 to more than 8 percent
after spiking 42 percent in 2012.
BNP Paribas said the Hong Kong government's discussion with
developers to accelerate pre-sale of residential units could
moderate property price growth and lower the risk of further
tightening measures, which would be positive for developers'
launches and for the sector.