Hong Kong shares steady at 19½-month high, China climbs

HONG KONG, Jan 22 – Hong Kong shares held around a 19½-month high for a third session today, while onshore China markets were on track to gain for a fourth-straight day, helped by strength in the financial sector.

However, lower volumes pointed to caution as benchmark indices run into chart resistance after a fast start to the year, and amid a growing number of profit warnings ahead of the corporate earnings season.

The Hang Seng Index was up 0.3 per cent at 23,657.4 at midday today, with chart resistance around 23,708, its high on May 31, 2011. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 0.8 per cent.

In the mainland, the CSI300 of the top Shanghai and Shenzhen listings rose 0.3 per cent, while the Shanghai Composite Index inched up 0.1 per cent.

“Earnings are clearly a risk, but I won’t get too worried right now. I would take some profit and rotate my money into names that are laggards and have less chance of earnings disappointment,” said Hong Hao, Bank of Communication International’s chief strategist.

Asian insurance giant AIA Group was the top boost to the Hang Seng Index, rebounding 1.4 per cent from yesterday’s one-month low.

AIA is still seeing earnings forecast upgrades, with two of 20 analysts raising their earnings per share expectations by an average of 4.8 per cent in the last 30 days, according to Thomson Reuters StarMine.

By contrast, 10 smaller companies issued profit warnings last night.

Vanke Properties Overseas slumped 6.8 per cent after warning it expects a “significant decrease” in full-year net profit, due mainly to the purchase in May of a Hong Kong-based property company by its parent China Vanke Co.

Shares in China Vanke, however, rose sharply for a second day after the company said yesterday its foreign-currency B-shares would move to Hong Kong. The B shares again rose by their 10 per cent daily limit, while its yuan-denominated A shares jumped 6.1 per cent.

The broader mainland market property sector eased as investors took profit after a period of outperformance.

Among companies that have already posted earnings, shares of Great Wall Motor jumped 2.7 per cent in Hong Kong, testing an all-time high in early trade, and 4.7 per cent in Shanghai.

China’s top manufacturer of sport utility vehicles and pick-up trucks said yesterday night its net profit for full-year 2012 jumped 65.7 per cent from a year before, trumping forecasts. – Reuters



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