July 26, 2013 / 5:06 AM / 4 years ago

China shares slip, Hong Kong flat in anaemic end to positive week

* HSI flat, H-shares -0.1 pct, CSI300 -1.0 pct

* HSI set for 5th weekly gain, longest such streak since October

* Anhui Conch buoyed by state deadline for cutting overcapacity

* AIA down nearly 2 pct despite strong growth in new business

By Clement Tan

July 26 (Reuters) - China shares trimmed weekly gains in lacklustre Friday trade, with financials put on the defensive as cash rates crept higher and the Chinese central bank chief reiterated that monetary policy would stay prudent, despite the slowing economy.

Shanghai shares of Anhui Conch Cement, the largest cement producer, were lifted by an order from China’s Ministry of Industry and Information Technology to companies across 19 industries to close outdated capacity by the end of September.

The CSI300 of the leading Shanghai and Shenzhen A-share listings went into the lunch break down 1 percent, while the Shanghai Composite Index shed 0.8 percent in the weakest midday volumes in more than two weeks.

For the week, the indexes were still up 1.1 and 0.6 percent respectively, underperforming Hong Kong. The Hang Seng Index , flat on the day, was up 2.6 percent this week and on track for a fifth-straight weekly gain, which would be the longest such streak since October.

The China Enterprises Index of the top Chinese listings in Hong Kong is down 0.1 percent on the day, but up 3.2 percent this week - its best weekly showing in almost three months.

Turnover in Hong Kong at midday was weak, coming off highs earlier this week after Chinese media reports spurred hopes for support from Beijing to stem the slowdown in the world’s second-largest economy.

“The quantitative folks are probably trading off technical levels on the benchmark indexes (in the mainland) today, which is why you see such choppy price movements,” said Zhang Qi, a Shanghai-based analyst with Haitong Securities.

“Volumes were particularly low this morning, it will be interesting to see if the money that has been trickling out of the outperforming smaller cap names will start to rotate back into the large caps ahead of the earnings season,” Zhang added.

The ChiNext Composite Index, which tumbled 4.7 percent on Thursday, fell another 1.5 percent as technology counters were hit by plans by liquid crystal display maker BOE Technology to raise 46 billion yuan ($7.5 billion). That could exert more pressure on already-tight liquidity in the mainland.

Shenzhen-listed BOE Technology dived 3.7 percent to its lowest in a month and was down nearly 12 percent for the week.

Chinese banks A-shares were also weaker, with mid-sized lenders Industrial Bank down 0.8 percent and China Merchants Bank shedding 1 percent as China’s weighted seven-day repo rate crept higher at Friday’s open.

Shares of AIA Group were down 1.8 percent at midday. Earlier, they were up as much as 2 percent after the Asian insurance giant reported on Friday a solid increase in the value of new business in the first half, buoyed by growth across its markets in Asia.


In comments in the official People’s Daily on Friday, People’s Bank of China Governor Zhou Xiaochuan, while affirming that monetary policy will remain prudent, pledged to improve financing channels for small firms.

His comments were the latest in a slew from top Chinese top officials suggesting Beijing’s response to slowing growth will not be a large-scale stimulus, but targetted measures aimed at restructuring the economy and improving capital allocation.

Beijing’s fight against industrial overcapacity gathered speed when the industry ministry set an end-September deadline for companies to comply with orders to shut down 654,400 tonnes of copper capacity and 260,000 tonnes of aluminum capacity, among others.

Anhui Conch Cement shares jumped 3.4 percent in Shanghai, but inched up only 0.2 percent in Hong Kong.

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