* HSI -0.1 pct, H-shares +0.6 pct, CSI300 +0.4 pct
* Shanghai stocks up on reports about free-trade zone
* Moutai, liquor stocks fall on weak 2014 outlook
(Updates to midday)
By Alice Woodhouse and Natalie Thomas
HONG KONG, March 25 China stocks rose on Tuesday
morning, largely due to strong gains by companies linked to
Shanghai's free trade zone after media reports indicated
restrictions on foreign investors there could be relaxed.
Gains were partially offset by declines in liquor counters
led by Kweichow Moutai Co Ltd, which forecast only a
small revenue increase this year.
Hong Kong shares eased slightly as investors looked for
direction ahead of Chinese bank earnings later this week.
Agricultural Bank of China will
announce its earnings later on Tuesday and Bank of China
will report on Wednesday.
Mainland media reported that officials would further relax
investment restrictions on foreign investment in the Shanghai
free trade zone.
Reports quoted Zhou Zhenhua, head of the Shanghai Municipal
development research centre, as saying regulators might reduce
the "negative list", widely touted as a clarification to
previous, vague guidelines restricting investment in China, for
the zone by 40 percent.
Cao Xuefeng, Chengdu-based head of research at Huaxi
Securities, said "There have been some fairly major adjustments
to the Shanghai free trade zone recently, so investors are
speculating on this geographical area again," said Cao
The CSI300 rose 0.4 percent, as did the Shanghai
Composite Index, which was at 2,075.24 points.
By midday, the Hang Seng Index was down 0.1 percent
at 21,820.64 points. The China Enterprises Index of the
top Chinese listings in Hong Kong rose 0.6 percent.
Castor Pang, Core Pacific Yamaichi head of research, said
the Chinese stock market was still in a consolidation phase,
with new preferred share rules seen as a positive sign.
"It implies that the Chinese government is willing to do
something to maintain the markets to be healthy, that's helped
local investors to maintain positive sentiments on Chinese
stocks listed in Hong Kong," Pang said.
On Tuesday, shares in Shanghai International Port Group
were up 10.1 percent, their daily limit, while those
in Shanghai Lujiazui Finance & Trade Zone Development Co
rose 10 percent. Shares in Shanghai Waigaoqiao Free
Trade Zone Development Co gained 8.5 percent.
China's alcohol producers fared less well as the
government's anti-graft crackdown on luxury consumption by
officials continues to hurt demand.
Kweichow Moutai, China's leading luxury 'baijiu' liquor
manufacturer, fell 3.7 percent even though it posted a stronger
than expected rise in 2013 net profit for 2013, as it predicted
just a 3 percent increase in revenue for 2014.
Shanxi Xinghuacun Fen Wine Factory Co Ltd lost
Shares in China's largest pharamceutical distributor
Sinopharm Group jumped 6.3 percent in Hong Kong after
Credit Suisse upgraded it to outperform from neutral. The
brokerage said the firm's core earnings growth may gradually
improve in 2015-16.
China's largest food and beverage maker Tingyi Cayman Island
Holding Corp rose 3.9 percent as brokers maintained
their buy rating on the stock, expecting the company to have
strong earnings in 2014 due to improving contributions for its
Pepsi business and lower costs of key raw materials.
($1 = 6.1888 Chinese Yuan)