(Updates to midday)
* HSI slips 0.3 pct, CSI300 down 0.5 pct
* GS, CS cut China forecasts
* Consumer stocks up on report of plan to boost retail sales
* Kweichow Moutai spikes after announcing price increase
By Clement Tan and Vikram Subhedar
HONG KONG, Sept 4 (Reuters) – Hong Kong and China shares
slipped on Tuesday in very thin trade, declining for a fourth
day out of five, as investors continued to move out of stocks
with underwhelming earnings and grim outlooks.
Adding to the gloom were more downbeat client notes from top
brokerages, with Goldman Sachs analysts saying they expect the
earnings slowdown to spill over into next year while Credit
Suisse scaled back expectations for the China Enterprises index
and cutting its rating on the banking sector.
This past earnings season has highlighted shrinking margins,
rising inventories and higher financing costs for many Chinese
firms.
“Earnings were actually slightly better-than-expected, but
everybody’s still very cautious with so much uncertainty about
the Chinese economy,” said Alex Wong, Ample Finance’s director
of asset management.
“But even then, it’s tough to make any substantial
positional changes because there are so few counterparties in
the market with turnover so low,” Wong added.
The China Enterprises Index of the top Chinese listings in
Hong Kong shed 0.7 percent, while the Hang Seng Index
inched down 0.3 percent as midday bourse turnover declined 22
percent from Monday.
The CSI300 Index of the top Shanghai and Shenzhen
listings was down 0.5 percent, while the Shanghai Composite
Index slipped 0.4 percent with midday bourse volume near
2012 lows.
Shares of Li & Fung, the global supply chain
manager for U.S. retail giants Walmart and Target
, fell 2.8 percent to their lowest intra-day level since
October last year.
It has lost more than 25 percent since posting weak
first-half operating profits on Aug. 9 that triggered a slew of
broker downgrades on fears of sluggish demand from the United
States, Europe and China.
Sany Heavy Industry sank 4 percent to its lowest
since Oct. 2010. The Chinese excavator maker missed forecasts
with a 28 percent fall in second-quarter net profit late last
week, as the country’s slowing economy led to a jump in unpaid
bills.
But losses in mainland markets on Tuesday were limited by
strong gains for the shares of premium liquor producer Kweichow
Moutai, which said on Tuesday it will raise prices
on some of its products by as much as 30 percent from the start
of September.
Moutai jumped more than 6 percent to its highest in almost
two weeks and it is now up 22 percent this year, a rare bright
spot in a market that could post a third-straight year of
losses. The CSI300 Index is now down 5.5 percent in
2012.
Other consumer-driven stocks saw some strength after
state-run Shanghai Securities News reported that Beijing is
targetting an 80 percent rise in retail sales from current
levels by 2015 in the country’s first five-year plan for
domestic trade.
Shares of Suning Appliance, China’s home
appliance retail chain operator, jumped 4.6 percent in Shenzhen.
The reported move to encourage consumer spending in China
would be one of several policy tweaks after two complementary
surveys released over the last three days showed China’s
manufacturing sector has been badly hit by slowing new orders.
More data is expected this Sunday, when Beijing will release
August data for inflation, industrial output, urban investment
and retail sales.
In a report on Tuesday, Goldman Sachs also cut its forecasts
for 2013 earnings growth for the MSCI China by 30 percent to
bring it more in line with the broader market consensus.
Credit Suisse cut its 12-month target for the China
Enterprises index by 8 percent to 12,000, although that is still
a jump of nearly 30 percent from current levels.
Its rating on the banking sector was cut to “marketweight” from
“overweight”.
Chinese shares in Hong Kong currently trade at 6.7 times
forward 12-month earnings well below its five-year average of
10.7 times, according to Thomson Reuters I/B/E/S.
(Editing by Edwina Gibbs)
