November 7, 2012 / 5:00 AM / 5 years ago

Hong Kong, China shares set for third-straight loss

* HSI -0.4 pct, H-shares -0.6 pct, CSI300 -0.3 pct

* Shanghai midday volume near 2012 lows, HK turnover steady

* China banks, property weak, bad loans reportedly to triple in 2012

* Espirit jumps, tracking surge in rights issue

By Clement Tan

HONG KONG, Nov 7 (Reuters) - Hong Kong and China shares were headed for a third-straight loss on Wednesday, led down by China’s banking and property sector after state media reported that bad loan ratios at the country’s top banks may triple by the end of the year.

Hong Kong turnover held steady at midday as U.S. election results pointed to a victory for President Barack Obama. Volume in Shanghai neared 2012 lows ahead of a once-in-a-decade political transition in China that formally starts with the 18th Communist Party Congress on Thursday.

The Hang Seng Index went into the midday trading break down 0.4 percent, while the China Enterprises Index of the top Chinese listings in Hong Kong slipped 0.6 percent.

On the mainland, the Shanghai Composite Index and the CSI300 Index of the top Shanghai and Shenzhen listings each lost 0.3 percent.

“There’s a fair amount of waiting in the market this week, but I think investors will only come back into the Hong Kong market after more clarity emerges from the 18th Party Congress meeting in Beijing next week,” said Edward Huang, equity strategist at Haitong Securities International.

Industrial and Commercial Bank of China (ICBC) slipped 0.4 percent in Hong Kong and 0.5 percent in Shanghai. Agricultural Bank of China (AgBank) lost 1.2 percent in Hong Kong and 0.8 percent in Shanghai.

The official Financial News newspaper, run by China’s central bank, reported on Wednesday that bad debts could soar in the steel, ship building and solar sectors as well as among exporters, local governments and property developers.

The report cited Orient Asset Management Corp - one of four firms charged with cleaning up bad debts at China’s banks.

The Chinese property sector was a standout underperformer among sectors in the mainland, shrugging off Hong Kong-listed Evergrande’s strong sales in October.

While Evergrande jumped 4.5 percent, most of its sector peers were weaker. The Shanghai property sub-index was down 1 percent, with Poly Real Estate down 2.1 percent.

Underscoring weak sentiment in the A-share market, shares of Sinohydro Group Ltd were down 2.9 percent in Shanghai despite the Chinese electricity provider unveiling a share buyback plan at a premium of almost 30 percent to its Tuesday closing price.

Europe-focused retailer Esprit Holdings limited losses on the Hang Seng Index, surging 6.8 percent as its rights issue made its trading debut on Wednesday, up 26 percent at midday.

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