(Updates to midday)
* Hang Seng Index up 1.2 pct, Shanghai up 1.3 pct
* S.Korea cbank to buy $300 mln of China stocks by July-end
* Bank, energy shares lead gains in HK, short-covering helps
* China home prices register first annual drop in 2 yrs
By Vikram Subhedar
HONG KONG, April 18 (Reuters) – Hong Kong shares bounced
back after two days of losses on Wednesday as stronger overseas
markets and a turnaround in the mainland markets on easing
concerns over China’s economic growth spurred some
short-covering.
The Hang Seng index ended the morning session up 1.2
percent at 20,808.86, recovering all its losses over the past
two sessions. The Shanghai Composite rose 1.3 percent.
Traders attributed the rally in Shanghai to news that South
Korea’s central bank would buy $300 million in Chinese stocks
over the next three months, and to a report that a Chinese
government researcher expects economic growth to accelerate in
the second-half.
“Those comments are certainly drivers,” said a Hong
Kong-based trader at an American brokerage.
“Besides, abundant liquidity has given A-shares good support
recently. You can see repo rates are falling again today,” said
the trader, pointing to the seven-day bond repo rate
that is considered a barometer of cash in the
financial system and driver for mainland stock markets.
The rate, currently at 3.5 percent, is down from 4.23
percent on six-week peak of 4.2 percent on April 6.
In Hong Kong, where short-selling has remained above the
average 8 percent level, some bearish bets were covered
following the biggest gains on Wall Street in a month and a
better-than-expected Spanish debt auction.
Petrochina shares rose 2.7 percent, providing the
biggest boost to the benchmark of China shares in Hong Kong
, followed by financials such as China Construction Bank
and ICBC, both up 1 percent, which were sold
over the past two days.
HSBC Holdings rose 1.7 percent as worries over
Spanish debt receded after Madrid sold a more-than-planned 3.2
billion euros ($4.21 billion) of 12- and 18-month bills on
Tuesday due to good demand from domestic banks.
Most Chinese banks are expected to report first-quarter
results next week and analysts at Citigroup expect the earnings
growth for the sector to slow markedly year-over-year due to
slower net-interest marging expansion.
Net interest margins, a key metric to measure profitability
of banks, are likely to decline across the board reflecting a
peaking of loan pricing and continued demand for deposits,
analysts Simon Ho and Paddy Ran said in a note.
Chinese property developers reversed earlier losses, with a
sector sub-index in Shanghai up 1.6 percent by midday
despite data showing the first annual drop in home prices since
the government launched measures to curb the sizzling property
sector two years ago.
“This is further evidence of China’s property macro control
measures,” said Ma Xiaoming, the NBS’ senior statistician in a
statement published alongside the data.
Shenzen-listed China Vanke rose 2.6 percent
while Polly Real Estate rose 3.4 percent.
(Reporting by Vikram Subhedar; Editing by Kim Coghill)
