* HSI +0.2 pct, H-shares +0.8 pct, CSI300 -0.8 pct
* China coal counters spike on favourable H1 operation data
* China property hit by prospect of tax expansion
* Luk Fook jumps on Q2 same store sales growth
By Clement Tan
HONG KONG, July 17 Hong Kong shares look set for
a third daily gain, lifted by strength in Chinese coal and
cement counters as investors rushed to cover short bets after
favourable June coal sales and a major cement producer sold
assets to its parent company.
Mainland Chinese markets slipped on Wednesday, with the
property sector again a key weakness after the country's tax
administrator said late on Tuesday that it was studying a
nationwide expansion of a real estate tax pilot.
By midday, the CSI300 of the leading Shanghai and
Shenzhen A-share listings was down 0.8 percent, while the
Shanghai Composite Index slipped 0.4 percent. Both have
been trapped in a 40-70 point range for almost a week.
The Hang Seng Index rose 0.2 percent and appears set
for a third day of gains, while the China Enterprises Index
of the top Chinese listings in Hong Kong climbed 0.8
percent. Turnover stayed weak.
"There are quite a few news items today, triggering some
rotation from some recent outperformers into cyclical names,"
said Linus Yip, a strategist at First Shanghai Securities in
"Some of these cyclicals counters are among the most beaten
up and are currently trading at big discounts. Going into the
August earnings season, some of them present good trading
opportunities," Yip added.
Shares of China Shenhua jumped 5.6
percent in Hong Kong to its highest in three weeks after posting
a solid operating performance in the first half of the year as
coal sales grew 9.3 percent in June from a year earlier. Its
Shanghai listing climbed 1.5 percent.
With its H-share listing still down nearly 36 percent on the
year, Shenhua is currently trading at 7.1 times forward 12-month
earnings, a 44 percent discount to its historical median,
according to Thomson Reuters StarMine.
Anhui Conch Cement spiked 5.9 percent in Hong Kong
and 4.4 percent in Shanghai after China's largest cement
producer sold production assets to a subsidiary of its parent
company. Cement production in China grew 9.8 percent in June,
which UBS analysts say is the fastest pace this year.
UBS also said the pace of new capacity additions is slowing
down, which along with a mild recovery in demand, will help ease
the problem of excess cement supply in China and improve
Chinese state television had reported late on Tuesday
Premier Li Keqiang as again saying that Beijing will not easily
deviate from pushing reform as long as growth falls within the
official comfort zone - comments that mildly bolstered
On Wednesday, the Commerce Ministry said measures to support
exports and imports will soon be released following anemic June
trade figures last week. Data on Wednesday showed direct foreign
investment increased 4.9 percent in the first half from a year
Luk Fook Holdings jumped 3.6 percent after the
jewellery retailer said same store sales surged 83 percent in
Hong Kong and Macau and 117 percent in the mainland in the first
quarter, lifting its jewellery sector rivals.
Investors rotatated out of the outperforming Chinese auto
sector on Wednesday. Great Wall Motor fell further
from Monday's one-month high, diving 4.2 percent. It is still up
45 percent on the year, compared to a nearly 6 percent loss on
the Hang Seng Index and 17 percent dive on the H-share index.
The Chinese property sector was again weak. China Vanke
, the country's largest property developer by sales,
tumbled 2 percent in Shenzhen, while China Resources Land
slid 1.2 percent in Hong Kong and is now down almost 4
percent on the week.