May 6, 2013 / 8:45 AM / in 5 years

Hong Kong shares close at near 2-mth peak, rising commodity prices buoy China

* HSI +1 pct, H-shares +1.4 pct, CSI300 +1.3 pct

* Jiangxi Copper jumps as Shanghai copper futures soars

* COSL lifted by DB upgrade on improved growth prospects

* Anti-graft move may douse expected China Q2 FAI pickup: CLSA

By Clement Tan and Yimou Lee

HONG KONG, May 6 (Reuters) - Hong Kong shares climbed to their highest in almost two months on Monday, while onshore China markets rose to a two-week high, buoyed by robust gains for commodities-related counters as prices in physical markets soared.

But gains in Hong Kong came in turnover that was weaker than Friday’s and was almost 10 percent below average. Shanghai volume, however, improved for a second session and was almost 10 percent above average.

The Hang Seng Index ended up 1 percent at 22,915.1 points, its highest close since March 11. The China Enterprises Index of the top Chinese listings in Hong Kong gained 1.4 percent.

The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 1.3 percent, while the Shanghai Composite Index was up 1.2 percent. Both closed at their highest since April 22.

“The active money in (Hong Kong) still remains quite short term, and today it’s chasing stocks that were relative underperformers last week,” said Jackson Wong, Tanrich Securities’ vice-president for equity sales.

Jiangxi Copper jumped 5.2 percent in its best day in five months in Hong Kong and 3.6 percent in Shanghai after Shanghai copper futures climbed by their 5 percent limit, catching up with strong gains last week after a positive U.S. April jobs report.

But shares of China’s top refined copper producer finished off the day’s highs after Reuters reported that it shut a 100,000-tonnes-a-year facility over the weekend due to a shortage of scrap and will bring forward maintenance at two facilities with combined capacity of near 450,000 tonnes a year.

Preliminary April trade data on Wednesday is likely to show China’s main commodity imports rose in April from a month ago, supported by a seasonal recovery in demand, but the pace of growth in the second quarter will likely be capped by constraints on manufacturing.

The Chinese oil sector was a key outperformer, following higher crude oil prices. CNOOC rose 1.4 percent, also helped by a UBS upgrade from “neutral” to “buy” after incorporating Nexen, which the Chinese oil giant had acquired, into their earnings outlook.

China Oilfield Services climbed 5.2 percent to its highest close since April 11 after the Deutsche Bank upgraded their view on the stock from “hold” to “buy” on better growth prospects, with CNOOC’s impending ramp-up of its offshore China production in 2014-2016 likely to benefit COSL.

Inner Mongolia Baotou Steel Rare-Earth jumped 5 percent in Shanghai on hopes that it will benefit from plans to consolidate China’s rare earths industry after the country’s Ministry of Industry released its planned focus for the year.


These growth-sensitive sectors were strong on Monday despite a new private survey adding to more evidence of rising risks to a revival in the world’s second-largest economy.

The HSBC services Purchasing Managers’ Index (PMI) fell to 51.1 in April from 54.3 in March, its lowest since August 2011, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009.

Beijing is due to release April economic data later this week, starting with trade on Wednesday and inflation on Thursday, with money supply and loan growth expected from Friday.

In a report on Monday, CLSA strategists said the anticipated pick up in fixed asset investment in the second quarter could disappoint because local governments could be more hesistant to start large projects due to tight scrutiny from Beijing’s anti-corruption campaign.

Casino operator Galaxy Entertainment spiked 5.9 percent after saying it would buy assets in Macau’s Cotai from Get Nice Holdings Ltd for HK$3.25 billion ($419 million).

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