* HSI +0.6 pct, H-shares +0.4 pct, CSI300 +1.2 pct
* Volumes modest as China HSBC PMI divergence spawns doubt
* Rongsheng soars after plans for convertible bonds
* Cheung Kong cuts 2013 losses ahead of H1 earnings
By Clement Tan
HONG KONG, Aug 1 China shares may post a
third-straight daily gain, with Hong Kong markets also firmer on
Thursday, as better-than-expected official manufacturing data
and a second cash injection by the central bank gave cyclical
sectors a lift.
Gains came in volumes that were only modestly stronger from
recent levels, however, reflecting a lack of conviction after a
separate private survey weighted more to smaller companies
showed factory activity at its lowest in nearly a year.
By midday, the CSI300 was up 1.2 percent, while
the Shanghai Composite Index climbed 0.9 percent. The
China Enterprises Index of the top Chinese listings in
Hong Kong gained 0.4 percent.
The Hang Seng Index climbed 0.6 percent to 22,010.3
points, after earlier testing its highest since June 5. All four
indexes went into the midday break off their respective intraday
"The positive official PMI shows corporate confidence
improved after official comments in the last few weeks provided
some assurance on growth, which along with the cash injections
this week, is helping markets," said Jackson Wong, Tanrich
Securities' vice-president for equity sales.
Angang Steel spiked 4.4 percent in Hong
Kong and 1.4 percent in Shenzhen after the official PMI, which
focuses on big and state-owned firms, rose to 50.3 in July from
50.1 in June, surpassing expectations for 49.9.
The HSBC PMI, which covers small and private companies,
dipped to 47.7 in July from June's 48.2 - the weakest reading
since August 2012 and matching a preliminary figure published
Thursday's China data came after the State Council again
pledged to step up spending on urban infrastructure projects and
public services in a statement after a regular meeting late on
While the country's Iron and Steel Association said on
Wednesday that steel demand was expected to remain weak in the
second half, Angang is likely seen as an outlier, expecting a
return to profitablity for a second successive quarter.
China shipping, another sector suffering from chronic
overcapacity, also had some respite.
Shares of China Rongsheng, the country's largest
private shipbuilder, surged 9.8 percent after announcing plans
to issue HK$1.4 billion ($180.52 million) in convertible bonds.
Barclays said conversion would result in a 20 percent increase
in outstanding shares, while pointing out the subscriber of the
issue to be a member of a private equity VMS Investment Group.
The embattled shipbuilder had appealed to the government and
large shareholders for financial assistance last month, after
cutting its workforce and delaying payments amid a global
Sentiment was further buoyed by a second cash injection by
the People's Bank of China this week, bringing the week's total
to 136 billion yuan ($22.19 billion).
This is its first time it has actively injected cash into
the money markets via reverse repos since February, in another
sign that Beijing is ready to support growth via targetted steps
as it shifts its focus towards quality growth.
CHINA PROPERTY STRONG AGAIN
Property and cement A-shares were also buoyed by a private
survey that showed new home prices in China rising 7.8 percent
in July from a year earlier.
The official China Securities Journal reported an official
with the National Development and Reform Commission as saying
that home price increases in first tier cities are not serious
and the trend will continue.
Poly Real Estate climbed 2 percent in Shanghai,
while Anhui Conch Cement climbed more than
2 percent each in Shanghai and Hong Kong.
Cheung Kong Holdings climbed 1.8 percent ahead of
its interim earnings due after markets shut on Thursday. Down
6.7 percent on the year, it is currently trading at a 34 percent
discount to its historical median 12-month forward earnings
multiple, according to Thomson Reuters StarMine.