* HSI +0.7 pct, H-shares +1.0 pct, CSI300 +1.4 pct
* Short-covering lifts banks after PBOC cash injection
* Yanzhou Coal dives after 2nd H1 profit warning in 3 mths
* Huaneng Power extends 2013 outperformance before earnings
By Clement Tan
HONG KONG, July 30 China shares climbed from a
three-week low on Tuesday, with Hong Kong markets also firmer,
led by the banking sector after the Chinese central bank
injected cash into the money markets for the first time since
The move eased some jitters of a repeat of last month's cash
crunch, but a weak coal sector curtailed index gains after
Yanzhou Coal issued a second warning in three months
on its interim earnings ahead of the August reporting season.
Gains also came in relatively weak volumes, with investors
marking time ahead of the outcome of a U.S. Federal Reserve
policy meeting and China's official manufacturing managers'
index (PMI) early on Thursday and Friday's U.S. jobs data.
At midday, the CSI300 of the leading Shanghai and
Shenzhen A-share listings was up 1.4 percent, while the Shanghai
Composite Index rose 1.1 percent. Both had closed on
Monday at their respective lowest since July 9.
The Hang Seng Index rose 0.7 percent to 21,996.3
points, stymied by chart resistance at about 22,034, a near-two
month intra-day high set last Friday. The China Enterprises
Index of the top Chinese listings in Hong Kong gained 1
"The PBOC (People's Bank of China) cash injection was a
positive today, but I don't think it will be anything more than
a short-term lift for the Chinese banking sector," said Linus
Yip, a strategist at First Shanghai Securities.
"The data points will be a key focus for the markets this
week, but even then, I don't think there will be anything - not
even the upcoming earnings season - that will alter anything too
significantly that will trigger meaningful inflows," Yip added.
Yanzhou Coal dived 7.1 percent to
HK$5.39 after the company said it expects to record a net loss
of 2.35 billion yuan ($383.20 million)for the first half of
2013, citing sliding coal prices and unfavorable exchange rates.
Its Shanghai listing slid 1.7 percent.
Losses in Hong Kong on Tuesday unwound a rebound for Yanzhou
Coal in the last three weeks and pushed its share price below
chart support at about HK$5.46, a level that had held since
"The worst is not over yet for Yanzhou Coal or for the China
coal sector," Goldman Sachs analysts said in a note to clients.
"2013 is only the beginning of a multi-year down-cycle for the
China coal industry, and see further margin squeeze and earnings
pressure in 2013-15."
Shares of Huaneng Power climbed 1.5 percent in
Hong Kong ahead of its interim earnings due later in the day.
Despite rising more than 12 percent largely on declining
coal prices, its H-share listing is still trading at a 32
percent discount to its historic median 12-month forward
earnings multiple, according to Thomson Reuters StarMine.
On the year, the Hang Seng Index is down 3 percent, while
the CSI300 has slid 12.5 percent.
SCANT RELIEF FOR CHINA BANKS?
China Minsheng Bank shares jumped 2.8 percent in
Shanghai as did other mid-sized Chinese lenders seen more
reliant on short-term cash flows, after the Chinese central bank
injected 17 billion yuan ($2.77 billion) in seven-day reverse
bond repurchase agreements.
Short-term money rates in China have been rising steadily in
recent weeks as the end of July approached and Chinese companies
and banks stocked up on cash to make dividend payments and put
books in order.
Gains on Tuesday lifted Minsheng's A-share listing from
Monday's near seven-month closing low, while its H-share listing
spiked 3.3 percent, largely on short covering.
A sub-index of China financials H-shares climbed
1.4 percent and another for CSI300 financial components
jumped 2.6 percent.