(Correcting to omit Deutsche Bank from banks named in paragraph
* HSI +1.1 pct on the day, +1.5 pct on the week
* CSI300 +1.7 pct on Friday, +4.5 pct this week
* China data slightly tops consensus, beta plays lead gains
* China railway slips in HK after disappointing 2013 budget
By Clement Tan
HONG KONG, Jan 18 Hong Kong shares hit a
19-1/2-month high on Friday, while China posted a first gain in
three days after better-than-expected data showed the world's
second-largest economy snapped seven-straight quarters of
declining economic growth.
Gains picked up in the afternoon, but volumes were well
short of the year's highs, suggesting investors were looking
beyond data that showed the China's economy growing 7.9 percent
in the fourth quarter and 7.8 percent in 2012 from a year
"I think today's numbers were broadly in line with what
people expected... and a trigger for strength in cyclical
sectors," said Wang Aochao, UOB-Kay Hian's Shanghai-based head
of China research.
The Hang Seng Index was up 1.1 percent at 23,601.8,
its highest since June 1, 2011. Gains on Friday covered the gap
on the chart that opened between June 1 and 2, 2011, something
the benchmark has struggled to do since the start of the year.
The China Enterprises Index of the top Chinese
listings rose 2.1 percent. The CSI300 of the top
Shanghai and Shenzhen listings climbed 1.7 percent, while the
Shanghai Composite Index gained 1.4 percent.
All four indexes saw weekly gains after posting losses last
week. Onshore outperformed offshore markets for the first time
in three weeks. The Hang Seng Index gained 1.5 percent, the
China Enterprises 2.2 percent, while the CSI300 jumped 4.5
percent and the Shanghai Composite 3.3 percent.
"We have had a pretty dramatic rally over the last few weeks
and most are now waiting to see how this economic recovery will
translate into earnings recovery," Wang added.
With the next set of economic data not due until March,
investors are likely to turn their attention to corporate
earnings. Some Chinese companies have begun posting fourth
quarter earnings, but the pace of reporting will only pick up
after the Chinese New Year next month.
On Friday, growth-sensitive sectors such as Chinese banks
were among the top boosts to benchmark indices. Industrial and
Commercial Bank of China (ICBC) rose 1.7
percent in Hong Kong and 0.7 percent in Shanghai.
Still, short selling accounted for 9 percent of ICBC's
turnover on Friday, compared to the 7.3 percent for the broader
Hong Kong market, pointing to lingering concerns balance sheet
risks China's largest lender might be holding.
ICBC shares in Hong Kong have now surged 49 percent from a
July 12 low and are now hovering at levels not seen since August
2011. This compares to the 24 percent jump for the Hang Seng
Index from the same July day.
Chinese railway stocks counters eased, bucking the broader
market after local media reported the railway ministry is
earmarking 650 billion yuan for railway development in 2013, up
3 percent on 2012.
Analysts at Bank of America-Merrill Lynch and Citi said the
budget increase was disappointing. In Hong Kong, China Railway
Construction slid 2.2 percent, while China Railway
Group shed 2.1 percent. Both outperformed in 2012,
surging 106 and 86 percent respectively.
CONSUMER DISCRETIONARY NAMES HAVE FIELD DAY
On top of quarterly and annual GDP figures, data ranging
from monthly industrial output to fixed asset investment and
retail sales were released on Friday and came in stronger than
China-focused consumer stocks were mostly firmer after the
country's statistics bureau said consumption was the largest
overall contributor to economic growth last year. The agency
also said price levels were largely stable.
Garry Evans, HSBC's global head of equity strategy, told
reporters at a press conference that some Chinese consumer and
infrastructure names represented good value plays, and he
expected them to do well this year, compared to quality or
growth plays which had done well in the past year.
In Hong Kong, shares of China's largest footwear retailer
Belle International spiked 3.3 percent, while Li Ning
surged 8.7 percent after Citi raised its price target
for shares of the embattled sports brand by 35 percent.
Shares of Gree Electric Appliances Inc had its
best day in 2-1/2 months, jumping 6.4 percent in Shenzhen after
China's largest appliance maker by sales said its net profit
rose around 41 percent in 2012 on the back of higher sales.
Chinese automakers were among the top performers on the day
with traders citing a local media report that Zhengzhou, a city
in central China, will prioritise locally produced vehicles when
making new purchases in a move to support the industry.
Baoxin Auto surged 8.2 percent after Goldman Sachs
added the China auto maker to its conviction list, citing its
high luxury car sales volume mix.
(Editing by Simon Cameron-Moore)