HK shares stay flat; China stocks extend gains

Published: 05 Jul 2009 21:35:30 PST

HONG KONG, July 6 - Hong Kong shares hovered on Monday hit by lower energy prices and lack of fresh cues on the state of the global economy, while China shares continued their upward march despite news of Shanghai's first major IPO since last September.

Chinese toll road operator Sichuan Expressway Co on Monday said it planned to raise as much as 2 billion yuan ($292.8 million) in a public share offering in Shanghai. The stock rose 1.5 percent to HK$3.42 in Hong Kong.

Stocks in Shanghai advanced 0.3 percent in a liquidity bounce as analysts argued the new supply of shares was not big enough the derail the stock market rally.

The official China Securities Journal cited Bank of China's research department as predicting that total new loans this year may reach 10 trillion yuan, while the trend of rapid loan growth would continue next year.

Here are the index moves and major stocks moves by midday-

HONG KONG

* The benchmark Hang Seng Index was 0.1 percent higher at 18,221.78.

* Standard & Poor's (S&P) Equity Research raised its end-2009 targets for the HSI to 19,800 points from 18,000 and for the Hang Seng China Enterprises index to 11,800 points from 10,500.

* "Risks will come from disappointment if data does not support the recovery scenario and it foresees the markets being range-bound as second-quarter data and earnings results come into focus," said Lorraine Tan, vice-president and director of equity research with S&P.

* BOC Hong Kong climbed 4.6 percent to HK$14.90 on a report its parent Bank of China (BOC) would launch a pilot scheme on Monday to allow bilateral trade with Hong Kong to be settled in yuan.

* The China Enterprises Index, which represents top locally listed mainland Chinese stocks, rose 0.1 percent to 10,995.78.

* The extended rally on the mainland Chinese market lifted China Life 2.1 percent to HK$29.70 on expectations of improved investment income in 2009.

* Agile Property rose 3.5 percent to HK$11.38 after the Chinese property developer said apartment sales for the first half of 2009 totalled 10.3 billion yuan ($1.51 billion), representing 64 percent of its annual sales target.

Earlier this year, Agile set 2009 sales targets of 16 billion yuan and 2.28 million square meters.

* Energy stocks slid as oil fell below $65 per barrel on Monday, extending last week's near 4 percent drop, as weak economic data continued to cast doubt over the prospects of a global economic recovery and energy demand.

Asia's largest oil and gas producer PetroChina gave up 1.2 percent, while offshore oil specialist CNOOC fell by the same degree.

* But Sinopec Corp climbed 2.2 percent with the state-run refiner seen benefiting from lower international crude prices as its product prices are controlled by Beijing.

SHANGHAI

* The Shanghai Composite Index ended the morning up 0.32 percent at 3,098.244, after setting a 13-month intraday high of 3,123.628 led by heavily weighted shares.

* Losing Shanghai A shares outnumbered gainers by 561 to 348, while turnover in Shanghai A shares ballooned to 115.6 billion yuan ($16.9 billion) from Friday morning's 85.5 billion yuan.

* The index is expected to move between 3,000 and 3,300 points in coming weeks, with subscriptions for the Sichuan Expressway IPO are due to begin next week, analysts said.

* "The index could go higher despite the resumption of IPOs in Shanghai as there is ample liquidity in the market," said Huatai Securities analyst Chen Jinren. "The Sichuan IPO is big, but not too large."

* The China Securities Journal reported that 57 new mutual funds were set up in the first half of 2009, adding up to 99 billion yuan in the market, with the trend likely to continue in the second of the year as signs of economic recovery grow.

The number of newly set up funds could hit a new high, after a record 103 new funds were set up in 2008, the paper added.

* Brokerage shares surged on news of the Sichuan Expressway IPO, with CITIC Securities jumping 7.71 percent to 31.87 yuan. The expressway sector was also lifted by Sichuan's IPO. Jiangxi Ganyue Expressway advanced 3.37 percent to 11.64 yuan.

* Steel shares were strong, with Baosteel up 4.66 percent at 7.64 yuan, after its president on Saturday said China's steel industry body was still looking for a lower iron ore price in negotiations with key suppliers while national output was set to remain high in July.

* Vanke gained 1.47 percent to 14.49 yuan after it said sales in June rose 57 percent year on year to 6.86 billion yuan, far exceeding market expectations.

* XJ Electric, a Chinese maker of machinery equipment and bearings, raced up its 10 percent daily limit to 20.11 yuan after being suspended from trade since June 4. It said it planned to sell up to 120 million additional shares to its parent company, in exchange for 1.82 billion-yuan's worth of assets.