* HSI -0.6 pct, H-shares -1.4 pct, CSI300 -1.8 pct
* Profit taking hits Chinese material, railway issues
* Chinese financials fall as repo rate creeps higher
* Solar firms rise after EU trade dispute resolved
By Yimou Lee
HONG KONG, July 29 China shares are set for a
fourth day of decline on Monday, with Hong Kong deepening
losses, as concerns over China's slowing economy kept investors
sidelined ahead of data that may show the world's second-largest
economy losing more momentum.
Chinese construction material and railway companies fell as
investors booked profits after recent rebounds following
Beijing's pledge to reduce overcapacity in sectors such as
cement and steel.
At midday, the CSI300 fell 1.8 percent, while the
Shanghai Composite Index dropped 1.6 percent to 1,979.38
points. Both fell to their lowest in a week.
The Hang Seng Index slipped 0.6 percent to 21,843.6
points, but was still hovering around seven-week highs. The
China Enterprises Index of the top Chinese listings in
Hong Kong fell 1.4 percent.
"Investors prefer to stay on the sidelines for the time
being," said KSI Asia Chief Operating Officer Ben Kwong in Hong
Kong. "The market moves sideways and follows individual company
news for trading."
"In the short term, it will still be an up-and-down market,"
he said, adding that he expected the Hang Seng to seesaw between
21,500 and 22,300 points in the coming weeks unless A-share
markets show a strong rebound.
China is set to release July manufacturing PMI on Thursday,
while HSBC's final reading is also due on the same day. The
leading indicators could show that the massive manufacturing
engine that powers China continues to lose steam.
Profits earned by China industrial firms slowed in June and
rose 6.3 percent from a year earlier to 502.4 billion yuan
($81.9 billion), easing from a year-on-year growth of 15.5
percent in May.
News that China's National Audit Office would conduct an
audit of all government debt also sparked worries about rising
bad debt levels that could weigh on the economy.
Anhui Conch Cement , China's largest
cement producer, dropped 3.8 percent in Hong Kong. Its
Shanghai-listed shares fell 6.6 percent after surging 10.2
percent last week.
China Railway Construction fell 3
percent in Hong Kong and 2.2 percent in Shanghai.
Rate sensitive sectors such as banks and real estate were
weaker as China's weighted seven-day repo rate
crept higher early on Monday.
Bank of China shed 1.2 percent in Hong
Kong and 1.1 percent in Shanghai, while Industrial and
Commercial Bank of China Ltd fell 1.2
percent in Hong Kong and 1.1 percent in Shanghai.
Mid-sized Chinese banks also fell, with Industrial Bank
down 3 percent and China Merchants Bank
shedding 2.5 percent.
Mainland property developer Vanke dropped 3.7
percent to its one-month low in Shenzhen, while China Resources
Land and China Overseas Land fell 2.6 and
1.1 percent in Hong Kong, respectively,
SOLAR SECTOR STRONG
The solar panel sector rose, encouraged by news that China
and the European Union defused their biggest trade dispute by
far with a deal to regulate Chinese solar panel imports and
avoid a wider war in goods from wine to steel.
In Hong Kong, shares in Solargiga Energy Holdings Ltd
jumped as much as 7.4 percent before trimming gains to
2.5 percent, while GCL-Poly Energy rose 1.5 percent.
Shares in China Molybdenum Co Ltd were suspended
on Monday morning ahead of an announcement that the company
agreed to buy a majority stake in the Northparkes copper mine in
Australia from Rio Tinto for $820 million.