Reuters: Financial Services and Real Estate: Hong Kong shares slip on weak Chinese banks, China down

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Hong Kong shares slip on weak Chinese banks, China down May 3rd 2012, 05:27 Thu May 3, 2012 1:27am EDT (Updates to midday) * HSI down 0.5 pct, CSI300 down 0.2 pct * More China macro clarity needed to underpin further gains: strategist * Chinese banks hit after Temasek trimmed stakes in CCB, BOC * Chinese developers weak after discounted mortgages reportedly withdrawn By Clement Tan HONG KONG, May 3 (Reuters) - Hong Kong shares slipped on Thursday, led by Chinese banks after Singapore state investor Temasek Holdings trimmed its stake in two of China's largest banks, pricing the deals at the bottom of an indicative range. Mainland Chinese markets were also weaker, with the CSI300 Index down 0.2 percent at midday, while the Shanghai Composite Index lost 0.4 percent, retreating from Wednesday's seven-week closing high. The China Enterprises Index of the top mainland listings slid 1.6 percent, while the Hang Seng Index closed down 0.5 percent at 21,203.5 at midday, further slipping from March closing highs at about 21,353 recorded on March 15. "If we go any higher from here, it will probably lead to a fresh 2012 high and there's no reason for that to happen right now, with China's economic data still lacking clarity and earnings looking dire," said Edward Huang, a strategist with Haitong Securities International. The Hang Seng Index is currently about 2.5 percent from the 2012 high, at 21,760.3, recorded on Feb. 20. On Thursday, China Construction Bank (CCB) declined 3.3 percent to HK$5.96 and Bank of China (BOC) slipped 4 percent to HK$3.99 at midday. Both were the top drags on the benchmark indexes in Hong Kong. Their losses weighed on the broader Chinese banking sector in the territory, with a gauge of Chinese financials down 1.4 percent. In Shanghai, CCB slipped 0.6 percent, while BOC was down 0.3 percent. Temasek sold about 1.61 billion CCB H-shares at HK$5.99 each and some 3.08 billion BOC H-shares at HK$3.13 per share, the term sheets showed. It was not immediately clear who bought the shares. Temasek's latest move is seen as an attempt to rebalance its financial sector exposure after it bought last month a $2.3 billion stake in Industrial and Commercial Bank of China (ICBC) from Goldman Sachs. While shares of Chinese banks have broadly rebounded in 2012 after steep losses in 2011, the "Big Four" banks are coming off weaker-than-expected first-quarter earnings posted last week, with a slowing Chinese economy and rising funding costs expected to weigh on them this year more than their smaller peers. PROPERTY WEAKNESS STALLS CHINA'S OUTPERFORMANCE In the mainland, property-related stocks were the biggest underperformers after Chinese media reported several banks in Shanghai, including ICBC, have withdrawn their discounted mortgage offers, raising fears that property sales could drop further. China's home prices fell in April for the eighth month in a row while transactions also declined in most cities, a private sector survey showed on Wednesday. The Shanghai property sub-index was down 1.3 percent, with Poly Real Estate and Anhui Conch Cement each down 2.5 percent. Shenzhen-listed China Vanke slumped 3 percent in midday volume almost equal to its 30-day moving average. Thursday's weakness looks set to stall, at least briefly, the outperformance of the mainland Chinese markets in April that has come in higher turnover. The CSI300 Index, which tracks listings in both Shanghai and Shenzhen exchanges, surged 7 percent in April. The Shanghai Composite Index jumped 5.9 percent in April, a contrast to the 0.4 percent gain for the MSCI Asia ex-Japan and the 4.1 percent and 2.6 percent gain for China Enterprises Index and MSCI China, respectively. (Editing by Ramya Venugopal) Link this Share this Digg this Email Reprints

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