Reuters: Financial Services and Real Estate: Hong Kong shares slide as Sun Hung Kai dives; China up

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Hong Kong shares slide as Sun Hung Kai dives; China up Mar 30th 2012, 04:57 Fri Mar 30, 2012 12:57am EDT (Updates to midday) * HSI down 0.6 pct, up 11.1 pct on quarter * Shanghai Comp up 0.4 pct, up 2.8 pct on quarter * Sun Hung Kai shaved a tenth of market cap after execs' arrest * Investors cheer ICBC, Bank of China 2011 earnings By Clement Tan HONG KONG, March 30 (Reuters) - Hong Kong shares slipped on Friday, underperforming Asian peers, mainly due to a 11 percent slump in Sun Hung Kai Properties after the company's two chairmen were arrested by the territory's anti-corruption commission. The Hang Seng Index slipped 0.6 percent at midday, poised for its first monthly loss in four, although the index is still poised for its best quarter in almost three years. Hong Kong's Independent Commission Against Corruption (ICAC) arrested SHKP chairmen Raymond and Thomas Kwok in the biggest investigation since the agency was launched in 1974 to root out what was seen as widespread corruption in the government and police. Shares in Asia's largest property developer sank to its lowest since December, but ended near the top of its trading range at midday in volume more than 17 times its 30-day average. "Given the 'surprise' nature of the current arrest, we believe the share price reaction of Sun Hung Kai Properties (SHKP) is likely to be exaggerated," Cusson Leong, Credit Suisse's head of Hong Kong research, said in a note to clients on Friday. "There isn't sufficient information at this point to quantify the negative impact of this arrest but given the mounting uncertainty, we believe investors should be avoiding the shares in the near-term before clarity improves," Leong added. SHKP's Hong Kong property sector peers were also not spared. Henderson Land lost 3.8 percent in more than triple its 30-day average volume at midday, while Sino Land declined 3.4 percent. BANKS LIMIT HK LOSSES, HELPS SHANGHAI EKE GAINS Losses in Hong Kong on Friday were pared by strength in two of the "Big Four" Chinese banks that reported favourable fourth quarter earnings late on Thursday, helping the Shanghai Composite Index inch up 0.4 percent. Industrial and Commercial Bank of China (ICBC) gained 1.6 percent in Hong Kong and 0.7 percent in Shanghai while Bank of China rose 1.6 percent in Hong Kong and 1 percent in Shanghai. Both banks reported fourth quarter earnings that were higher than expectations, although non-performing loans increased. The Shanghai Composite Index is poised for its worst month since last September as growth concerns escalated. It is also the worst performer among major Asian markets, up 2.8 percent. Chinese fund managers slashed their suggested equity weightings in March to the lowest level in 21 months on fears that China's economic growth would slow sharply while monetary policies would remain tight, a Reuters poll showed on Friday. Underwhelming 2011 corporate earnings have aggravated fears that China's slowing economy could be hurting profitability more than expected, paring the rally this year after a 20 percent decline last year in Hong Kong and 22 percent in Shanghai. According to Thomson Reuters StarMine, of the 64 percent of Chinese companies that have reported earnings so far, 74 percent have missed expectations. Market observers said investors are eyeing 2012 first quarter earnings due in April and the next batch of China data, starting with Beijing's official manufacturing purchasing managers' index (PMI) on Sunday, Last week, the HSBC flash purchasing managers index, the earliest indicator of China's industrial activity, fell back to 48.1 from February's four-month high of 49.6. (Additional reporting by Vikram Subhedar; Editing by Ramya Venugopal) Link this Share this Digg this Email Reprints

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