Hong Kong shares eke out a gain

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Hong Kong - Hong Kong shares eked out their first gain in three days on Thursday as strength in banking stocks offset a fall in the property sector after leading lenders raised mortgage rates for the first time since 2011.

Onshore Chinese markets posted their first rise in six days, although gains came in the weakest Shanghai volume since December 24 as China's money rates rose after the central bank drained funds via open market operations, raising concerns about tighter liquidity.

The Hang Seng Index ended up 0.3 percent at 22,619.2 points, reversing midday losses after earlier plumbing its lowest levels since December.

The China Enterprises Index of the leading Chinese listings in Hong Kong rose 0.6 percent.

On the mainland, the Shanghai Composite Index and the CSI300 of the top Shanghai and Shenzhen A-share listings both climbed 0.3 percent. Both indexes have had five-day losing streaks, taking them to two-month lows.

“I don't think demand or home prices will be too adversely affected by yesterday's mortgage hikes, but it's a trigger for a stock market that is still looking for a bottom,” said Jackson Wong, Tanrich Securities' vice-president for equity sales.

After markets closed on Wednesday, HSBC and Standard Chartered announced a 25 basis point hike in mortgage lending rates. Hang Seng Bank followed suit on Thursday.

This follows the Hong Kong Monetary Authority's move last month to tighten home loan approvals as policymakers try to tamp down soaring housing prices.

Sun Hung Kai Properties and Henderson Land both sank 3.3 percent. Hong Kong banks climbed, with Hang Seng Bank up 2 percent and Bank of East Asia up 1.5 percent. HSBC climbed 0.9 percent.

While other lenders in the territory are expected to raise mortgage rates As well, Credit Suisse analysts said banks may not be too aggressive given shrinking mortgage volumes after the recent government measures.

“We believe the increase in the mortgage rate will have limited impact on affordability,” Credit Suisse's Cusson Leong and Joyce Kwok wrote in a note dated March 14. They suggested investors buy on weakness, with Sun Hung Kai Properties and Henderson Land among their top picks.

Deutsche Bank forecast that with the government moves, possible further rises in mortgage rates and expected increases in housing supply, home prices in Hong Kong may fall between 15 and 20 percent in the next 24 months.

CHINA EARNINGS IN FOCUS

Investors are looking to gauge the impact on Chinese companies following economic data pointing to a more subdued economic recovery and the central bank governor's hawkish comments signalling a pullback from loose monetary policy.

China Mobile ended up 0.2 percent after its 2012 earnings, released at the midday trading break, beat expectations with a 2.7 percent rise in net profit from a year earlier.

The country's largest mobile operator also announced plans to raise spending in 2013 to 190.2 billion yuan from 127.4 billion yuan in 2012, bolstering the shares of telecom equipment maker ZTE , which jumped 8.8 percent in Hong Kong and 8 percent in Shenzhen.

Ping An Insurance slipped 0.4 percent in Hong Kong ahead of its 2012 earnings due after market close.

Down nearly 5 percent on the year, Ping An's shares are now trading at a 40 percent discount to their median forward 12-month earnings multiple, according to Thomson Reuters StarMine. - Reuters