January 10, 2014 / 4:51 AM / 4 years ago

CORRECTED-Trade data fails to inspire China shares, property props up Hong Kong

(Corrects headline and 1st paragraph to reflect weekly gain for HSI)

* HSI +0.3 pct, H-shares flat, CSI300 -0.5 pct

* Most indexes set for 2nd straight weekly loss, HSI could gain

* Brokers fall on signs of A-share IPO resumption could slow

* GCL-Poly tumbles after China wealth fund trims stake

By Clement Tan and Alice Woodhouse

HONG KONG, Jan 10 (Reuters) - China shares sank to more than five-month lows early on Friday as trade data failed to inspire investors, while strength in Hong Kong property counters helped the Hang Seng Index eke out a slim weekly gain ahead of U.S. jobs data later in the day.

Most benchmark indexes were headed for their second-straight weekly loss as investors fretted over how the resumption of A-share initial public offerings after a halt of more than a year will inject more competition for funds at a time of tightening money supply in the mainland.

At midday, the Hang Seng Index was up 0.3 percent at 22,859.4 points, and was slightly positive on the week, while the China Enterprises Index was trading flat after earlier testing its lowest intra-day level since early September.

The Shanghai Composite Index and the CSI300 of the biggest Shanghai and Shenzhen A-shares both shed 0.5 percent, with the former just holding above the 2,000-point mark. They are now at their lowest levels since end-July.

The Shanghai benchmark has made its worst start to a year since 2002, losing nearly 5 percent in the first seven sessions of the year. The H-share index also has underperformed, falling 6.2 percent over the same period.

“The equity markets seem to be pricing in rather quickly expectations of slower China growth,” said Erwin Sanft, Standard Chartered’s head of Hong Kong-China research.

Official data on Friday showed China’s export growth slowed more than expected in December due to a higher comparison base a year earlier and a clamp-down on speculative activities disguised as export deals, missing the official target on foreign trade.

Imports grew more than expected, however, raising optimism that domestic demand remained firm.

Bu with Beijing showing signs that it is ramping up the pace of financial reform, which involves tighter oversight of shadow banking activities and debt levels, investors are now bracing for slower growth in the world’s second-largest economy.

The official China Securities Journal reported on Friday Chinese Premier Li Keqiang as saying the government’s audit work this year would focus on the fiscal and financial sectors to detect any possible risks.

In another report, the same newspaper also quoted industry sources as saying that Chinese banks are unlikely to “front-load” lending activity at the start of the year as they had in previous years after the central bank tightened loan quotas.

Financial counters were weak on Friday, with brokerages leading losses after Chinese drug maker Jiangsu Aosaikang Pharmaceutical Co Ltd said it will postpone its initial public offering until an appropriate time because “the proposed issuance was too big.”

This comes a day after the 21st Century Business Herald newspaper reported that the China Securities Regulatory Commission has asked some companies to slow down their IPO preparations.

Shares of Haitong Securities , China’s second-largest listed brokerage, dived 3.1 percent in Hong Kong and 2.1 percent in Shanghai. Citic Securities sank more than 1 percent in Hong Kong and Shanghai.

Cosmetics retailer Sa Sa International Holdings Ltd tumbled 6.9 percent in what could be its biggest single-day loss in nearly 10 months after posting 17.4 percent growth in third-quarter sales in Hong Kong and Macau, short of expectations.

Wind and solar energy firm Huaneng Renewables Corp Ltd shares dived 6.7 percent after it reported power generation figures for 2013 that missed expectations.

China’s top polysilicon producer GCL-Poly Energy Holdings Ltd sank 6.2 percent on news that Chengdong Investment Corp, a subsidiary of sovereign wealth fund China Investment Corp, planned to trim its stake in the company.

Henderson Land led gains in the Hong Kong property sector, rising 2.7 percent. After the stock lost 11 percent in 2013, market watchers say its valuation was now looking attractive given that developers are starting to offer discounts to keep up home sales volumes. (Editing by Kim Coghill)

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