(Update to midday)
* HSI up 0.5 pct, CSI300 flat
* China Unicom jumps after favourable Q1 earnings
* BYD, ZTE punished after earnings disappoint
* China Everbright surge after Bo's brother resigns
By Clement Tan
HONG KONG, April 26 Hong Kong shares rose on
Thursday, helped by a 2.9 percent jump in China Unicom after it
reported strong quarterly profit growth, as the ongoing earnings
season drove major price moves in the market.
The U.S. Federal Reserve's reiteration of their commitment
to a pro-growth policy position also spurred gains in riskier
sectors, with price movements seen partly exaggerated by weak
bourse midday turnover that neared the year's lows.
Mainland Chinese markets ended the morning session slightly
weaker, with the CSI300 Index flat and the Shanghai
Composite Index down 0.2 percent as A-share turnover in
Shanghai hit its highest at midday since March 14.
The Hang Seng Index rose 0.5 percent, while the China
Enterprises Index of the top mainland listings in Hong
Kong gained 0.6 percent.
"Investors are still cautious and relatively defensively
positioned. It's still a macro-driven market and won't be a good
year for growth in Chinese companies generally," said Francis
Cheung, CLSA's China-Hong Kong strategist.
"They will likely look to companies that reward reasonably
good earnings and whose share prices are relatively cheap,"
On Thursday, China Unicom , the
mainland's second-largest mobile phone operator, rose 2.9
percent in Hong Kong and 0.5 percent in Shanghai after it
reported late on Wednesday a surge in first-quarter profit as
subscriber demand for data offset hefty handset subsidies paid
to phone makers.
Credit Suisse and Citi analysts maintained their "buy"
ratings on Unicom's Hong Kong listing, expecting it to be a
major beneficiary of 3G market growth in China, particularly
from the third quarter this year.
China Unicom was the top performer among Hang Seng Index
components in 2011, soaring 47 percent, but it is down almost 18
percent this year, lagging the benchmark and its sector rival,
China Mobile, which is up almost 12 percent.
Unicom is currently trading at a 53.5 percent premium to its
historical average, according to Thomson Reuters StarMine. By
contrast, China Mobile is trading at a 10 percent discount to
its historical average.
Unicom, however, has the best long-term earnings growth
potential among sector peers, suggesting some investors could
still choose to pay a premium for its profitability in a slowing
growth environment in China.
Quarterly earnings results also drove the major moves in
other stocks. BYD Co Ltd , a Chinese
carmaker backed by U.S. billionaire Warren Buffett, slumped 5.2
percent in Hong Kong and 3.4 percent in Shenzhen.
It posted a 90 percent slide in quarterly profit late on
Wednesday, hit by a slowdown in the world's largest car market
and losses in its solar business.
China's ZTE Corp , the world's
fifth-biggest telecommunications equipment maker, was also hurt
by weaker-than-expected first-quarter profit following sluggish
telecoms spending and price wars.
ZTE lost 1.7 percent in Hong Kong and 2.6 percent in
Shenzhen. This year to date, its H-share listing is down 21
percent while its A-share listing is up 1.5 percent, both
underperforming their respective markets.
China Everbright International Ltd soared 6.7
percent in midday volume that has exceeded its 30-day average
after the brother of ousted Chongqing party leader Bo Xilai, the
main figure in a growing Chinese political scandal, resigned as
its vice chairman.
(Editing by Ramya Venugopal)