* Hang Seng down 0.2 pct, closes below 100-day moving avg
* HSBC down 1.4 pct, outweighing oil producer rebound
* Shanghai Comp off 0.3 percent, stays below 125-day MA
(Updates to close)
By Vikram Subhedar and Clement Tan
HONG KONG, May 11China shares edged lower on
Wednesday as high inflation and tighter liquidity kept investors
cautious, while a slide in HSBC pulled the Hong Kong's broader
market lower and may keep the benchmark below its 100-day moving
average in the near term.
China's higher-than-forecast inflation in April and
expectations the central bank will have to continue to take
steps to mop up funds from the financial system, analysts see
few catalysts for a sustained rally in the markets.
Hong Kong's Hang Seng ended the day down 0.2 percent
as a 1.4 percent slide in shares of index heavyweight HSBC
more than offset the rebound in the oil plays. CNOOC
closed up 1.3 percent.
The benchmark index struggled to stay above its 100-day
moving average, currently at 23,435.5 which is now seen as a
"With CPI coming in higher than expected again today, I
think that inflation concerns will continue to plague risk
appetite," said a head trader at Hong Kong-based broker.
A weak mainland market that saw the Shanghai Composite
shrug off early gains to end down 0.3 percent on the day
"Funds are not willing to invest in a market bereft of any
direction at this point," said Zhang Qi, an analyst with Haitong
Securities in Shanghai. "This is neither a bear nor a bull
market. It's a monkey market, jumping up and down."
HSBC Holdings fell 1.4 percent after the bank said
it was eyeing cost savings of $2.5 billion-$3.5 billion and is
mulling the sale of its U.S. credit card business, according to
In a bearish sign, volume in the counter, which commands a
15 percent weighting on Hong Kong's benchmark Hang Seng index,
picked up as losses deepened. Traders expect further weakness
after the shares go ex-dividend next week putting a lid on gains
for the broader market.
Bucking the overall weak trend, another European company,
Esprit Holdings , bounced 2.6 percent from its lowest
level in more than 2-1/2 years.
Traders speculated that the beaten-down counter could see a
revival of buying interest on news that other upscale retailers
including handbag maker Coach Inc were planning to list
in Hong Kong reflecting the growing importance of China's luxury
China stocks shrugged off midday gains to finish lower on
Wednesday after government data pointed to persistently high
inflation with analysts forecasting inflation pressures easing
only in the latter half of the year.
The benchmark Shanghai Composite finished at
2,884.4, about 10 points below its 125-day moving average which
it tested during the short-lived bounce earlier in the day.
China's inflation eased in April to 5.3 percent, though was
higher than forecast, while industrial output and retail sales
slowed more than expected.[ID:nL3E7GB0H2]
The upward price trend appeared to have been curbed, though
China was still facing relatively big inflation pressure, said
Sheng Laiyun, a spokesman of the National Bureau of Statistics.
"Therefore, we must not underestimate the situation and keep
making it the priority to control price rises."
A-share turnover on the Shanghai bourse increased from
Tuesday low levels but remained under its 20-day average for the
thirteenth straight session, barely hitting RMB 10.6 billion.
Financial stocks weighed the most on the benchmark, with
Industrial and Commercial Bank of China Ltd (ICBC)
the biggest weight, losing 0.7 percent on the day.
Auto stocks were also broadly weaker with SAIC Motor
, down 2.6 percent, after the outlook for car sales
in China dimmed after two years of rapid expansion partly driven
by government incentives. [ID:nL3E7FS23W]
(Editing by Kevin Plumberg)