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Hong Kong, China shares eke out gains; Sands China slumps
July 26, 2012 / 5:11 AM / in 5 years

Hong Kong, China shares eke out gains; Sands China slumps

(Updates to midday)

* HSI inches up 0.1 pct, CSI300 gains 0.2 pct

* Sands China dives after parent LV Sand’s earnings miss

* Ajisen slumps after warning on profits

* HKEx falls after LME board votes to accept deal

By Clement Tan and Vikram Subhedar

HONG KONG, July 26 (Reuters) - Hong Kong shares ended a choppy morning session slightly higher on Thursday, with weak sentiment further aggravated by a fresh spate of profit warnings from Chinese companies ahead of their second-quarter corporate earnings reporting season.

Sands China slumped 6.5 percent to the lowest since Dec. 20 after its parent Las Vegas Sand Corp posted underwhelming second-quarter earnings, dragging the broader Macau gaming sector lower.

Mainland Chinese markets also saw some strength, with the Shanghai Composite Index and CSI300 Index of the top Shanghai and Shenzhen listings each up 0.2 percent. Shanghai bourse volume lingered near 2012 midday lows.

The Hang Seng Index closed up 0.1 percent at 18,887.6 at the midday trading break. The China Enterprises Index of the top Chinese listings in Hong Kong was flat.

“Sands China is the big theme today for shorts,” said Benjamin Chang, chief executive officer of LBN Advisors, a firm that manages $450 million worth of assets in two China funds.

Sands China weakness also spread to its Macau gaming peers. Concern over the sector’s July revenues is beginning to surface, with some suggesting that the industry in Macau could see a first monthly decline since 2010, traders said.

Galaxy Entertainment and Wynn Macau each lost 4.1 percent, while MGM China shed 4 percent. Although losses came in robust volumes, traders said the bulk of the sell-off in the sector came in the last two weeks of June.

Sands China is poised for a third-straight monthly decline. It is now down 5.2 percent for the year after declining 13 percent in May, 7.5 percent in June and 15 percent in July to date.

The strong interest in the Macau gaming sector stood out against the feeble turnover in the broader market, which has hurt the bourse operator, Hong Kong Exchange (HKEx).

HKEx is down 1.5 percent at HK$100.10, its lowest since last October and could break below HK$100, after London Metal Exchange (LME) shareholders voted convincingly on Wednesday to accept its $2.2 billion offer.

Restaurant chain operator Ajisen (China) Holdings Ltd slumped 9.2 percent after it warned that first-half net profits are expected to decline significantly, no thanks to sluggish consumer demand and increasing operating costs.

“You would think after all the warnings that people would not be that surprised by now, but the magnitude of the move down for these companies suggests otherwise,” LBN’s Chang added.


In onshore Chinese markets, strength in the shares of gold miners on rising gold prices helped prod markets higher at midday after a choppy morning session.

Shandong Gold rose 2.9 percent, while Zhongjin Gold gained 1.7 percent and Zijin Mining , the mainland’s largest gold miner, rose 1.4 percent.

Chinese property developers extended weakness on Thursday after Xinhua News Agency said in a commentary on Wednesday that China’s local governments must not challenge Beijing on property market controls, especially its limits on home purchases.

China Vanke lost 1.2 percent but bounced off the day’s lows, its lowest since June 29. If losses persist in the afternoon, this would be Vanke’s fifth loss in six sessions.

Although Vanke is still up more than 20 percent on the year, investors have been taking profits in recent sessions after official data last week showed housing prices rising for the first time in nine months, sparking fears Beijing could clamp down further on the sector. (Editing by Jacqueline Wong)

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