August 6, 2014 / 4:56 AM / 3 years ago

Hong Kong, China shares fall as profits taken on blue-chips

* HSI -0.6 pct, H-shares -0.8 pct, CSI300 -0.6 pct

* Chinese solar companies strong on report of policy support

* HKEx drops ahead of H1 results (Updates to midday)

By Grace Li

HONG KONG, Aug 6 (Reuters) - Hong Kong and China shares dropped on Wednesday with investors taking profits on recently-strong Chinese blue-chip stocks and keeping an eye on declines in U.S. markets.

The Hang Seng Index, which has risen 10 out of 11 previous sessions, was down 0.6 percent to 24,497.88 points at midday. The China Enterprises Index of the top Chinese listings in Hong Kong fell 0.8 percent to a two-week low.

The CSI300 of the leading Shanghai and Shenzhen A-share listings was off 0.6 percent, while the Shanghai Composite Index edged down 0.5 percent to 2,209.79 points.

On mainland markets, the second day of decline is “a normal market correction after recent heavy gains, while there is no major negative news on the horizon,” said Zheng Weigang, a senior trader at Shanghai Securities.

“The correction is not likely to divert the recent uptrend of the mainland’s stock markets,” he said. “Investors will continue to buy A-shares in large caps, whose prices lag their Hong Kong counterparts. The Shanghai market’s rally should last at least until late September because of the Shanghai-Hong Kong connector.”

In Shanghai, top index drags PetroChina slipped 0.8 percent and Industrial and Commercial Bank of China 0.6 percent.

One factor weighing down the Hong Kong benchmark was several down sessions for stocks in New York, said Castor Pang, head of research at Core Pacific-Yamaichi.

But he said the Hang Seng should have strong support around the 23,800-point level.

On Wednesday, Hong Kong-listed Chinese solar companies were key outperformers, tracking gains in their U.S.-listed peers after a Bloomberg report said China may announce policies to encourage residential solar-power installations as soon as this month.

China Singyes Solar Technologies Holdings jumped 6.1 percent and GCL-Poly Energy Holdings climbed 1.9 percent.

Hong Kong Exchanges and Clearing eased 0.3 percent ahead of interim earnings during lunch break which showed a modest rise in net profit. Its shares reached a more than three-year high last week due to progress on creating the “connector”, a cross-border trading link with mainland markets.

Guotai Junan International spiked 4.1 percent to near its all-time high. The brokerage reported half-year net profit that was nearly triple the level one year earlier.

Leading losses on the Hang Seng was China Unicom, which sank 4.8 percent after closing on Tuesday at its highest since October 2012.

Interim corporate results will dominate the China and Hong Kong markets over the next few weeks, with a slew of China July economic data also in focus, starting with trade on Friday and inflation on Saturday. (Additional reporting by Lu Jianxin in SHANGHAI; Editing by Richard Borsuk)

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