December 26, 2012 / 5:10 AM / 5 years ago

China shares slip from near six-month high, property sector bucks trend

(Updates to midday)

* HK closed, CSI300 -0.2 pct, Shanghai Comp -0.3 pct

* China urbanisation-related plays strong, local media feeds demand hopes

* Vanke shares suspended, local media says company’s B-shares to relist in HK

By Clement Tan

HONG KONG, Dec 26 (Reuters) - Mainland China shares slipped from Tuesday’s near six-month high as investors sold bank shares after the sector’s stellar gains earlier this month helped lift the market’s benchmark indexes out of negative territory on the year.

Index losses on Wednesday were limited by strength in the property sector as investors found cheer in a media report outlining Beijing’s plan to further urbanise China, even though home purchasing curbs will likely remain in place.

Hong Kong markets have been closed since midday on Monday for the Christmas holiday and will resume trading on Thursday.

The CSI300 Index of the top Shanghai and Shenzhen listings went into the midday trading recess down 0.2 percent at 2,448.4. It is now up 14.2 percent in December, set for its best monthly showing in more than two years.

The Shanghai Composite Index slipped 0.3 percent, but stayed in positive territory on the year after a 2.5 percent jump on Tuesday erased 2012 losses. It is now up 0.4 percent this year, set for a first annual gain in three years.

“Investors are consolidating strong gains yesterday, but sentiment has clearly changed for the better,” said Zhong Hua, a Shanghai-based equity strategist with Guotai Junan Securities.

“Not too long ago, property stocks would have suffered if there were headlines like today, reiterating purchasing curbs for next year. Instead, they are extending strong gains on hopes of better demand from urbanization policies.”

The official Shanghai Securities News on Wednesday cited an official from the housing ministry as saying Beijing’s policy focus on urbanisation will likely lead to reforms in the so-called hukou, or household registration, system to help smaller, rural cities catch up with their biggest cousins in development.

Investors in property shares were unfazed by a report by the official Xinhua news agency on Tuesday saying China will extend its property tightening policies into 2013 to choke speculative buying while expanding its trial property tax.

Poly Real Estate rose 0.7 percent in Shanghai. Shares of China’s second-largest property developer by sales are now up 55.2 percent in 2012.

Trading in shares of China Vanke Co Ltd, the country’s biggest property developer by sales, was suspended in Shenzhen on Wednesday pending an announcement, the firm said late on Tuesday.

Local media reported that the company plans to convert its Shenzhen-listed B shares, denominated in Hong Kong dollars, into a Hong Kong listing.

In May, the official China Daily newspaper reported that Vanke had bought a 73.9 percent stake in Hong Kong-listed Winsor Properties Holdings in its first step in its “long-term overseas expansion plans.”

PROFIT-TAKING SINKS BANKS

On Wednesday, weakness in the banking sector outweighed strength in the urbanisation-themed sectors.

Among the country’s “Big Four” banks, Industrial and Commercial Bank of China (ICBC) declined 1.2 percent in Shanghai after closing at a six-month high on Tuesday. ICBC is now set for a third-straight monthly gain that has helped cut losses on the year to 3.5 percent.

Smaller rival Bank of Beijing dropped 2.5 percent after closing on Tuesday at its highest since May 2011. It is still up 25.8 percent in December, set for its best monthly showing in 3-1/2 years.

Much of the rally in the Chinese banking sector this month has come after China’s insurance regulator abolished limits for insurance firms’ investments in the country’s banks. Previously, firms were unable to invest in more than two banks if they owned more than 5 percent of any single bank. (Editing by Ryan Woo)

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