August 28, 2014 / 5:00 AM / 3 years ago

China shares fall as IPO subscriptions start, weighing on Hong Kong

* HSI +0.1 pct, H-shares -0.2 pct, CSI300 -0.5 pct

* Coal firms rise on report about govt support

* Guanghui Energy soars 10 pct on crude import licence

* Country Garden sinks after rights issue plan (Updates to midday)

By Grace Li

HONG KONG, Aug 28 (Reuters) - China shares edged down in choppy morning trade on Thursday as a batch of initial public offerings (IPOs) began taking subscriptions, diverting money from existing stocks.

Weakness in the mainland market pared gains in Hong Kong, which had opened up 0.6 percent following another steady performance by Wall Street, where indexes hovered near record highs.

By midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings fell 0.5 percent to a four-week low, while the Shanghai Composite Index slipped 0.4 percent at 2,201.37 points.

The Hang Seng Index was 0.1 percent higher at 24,939.27 points. The China Enterprises Index of the top Chinese listings in Hong Kong was off 0.2 percent.

Castor Pang, head of research at Core Pacific-Yamaichi, said China’s onshore A-share market is a drag on Hong Kong at the moment. “Until the Shanghai benchmark has a breakthrough, Hong Kong’s stock market will continue the yo-yoing situation,” he said.

A key figure ahead is China’s official August manufacturing purchasing managers’ index (PMI), due on Monday. In Pang’s view, “if that is weakening, then markets for both Hong Kong and China for sure will have a pullback.”

Chinese banks extended Wednesday’s losses. Agricultural Bank of China, joining two other major banks, late on Tuesday reported slowing profit growth and rising bad loans for the second quarter.

AgBank slid 0.8 percent on Thursday, while largest lender Industrial and Commercial Bank of China lost 1.2 percent, its biggest drop in three weeks.

Coal producers posted gains after the official Shanghai Securities News said on Thursday the country’s top planning body is convening a meeting with some big power producers and coal companies to show support for the beaten-down sector.

China Shenhua Energy added 0.7 percent in Hong Kong and 0.3 percent in Shanghai.

Top CSI300 boost Guanghui Energy surged the maximum allowed 10 percent after the company said it received a crude oil import licence from the government, the first non state-owned enterprise to get one.

Country Garden dived 4.7 percent after the Chinese developer said it is proposing to raise up to HK$3.18 billion ($410 million) through a rights issue plan. (1 US dollar = 7.7500 Hong Kong dollar) (Editing by Richard Borsuk)

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