Hong Kong - Hong Kong and China shares eked out their first gain in three sessions on Monday, as strength in heavyweight financial stocks countered weakness in the property sector amid weak volume that pointed to lingering caution after steep losses last week.
The Hong Kong property sector was a drag after the city government announced more measures last week to cool the market, while most Chinese developers were hurt by an official news report that more curbs are in store.
The Hang Seng Index rose 0.2 percent to 22,820.1, bouncing off last Friday's 2013 closing low with its first gain in three days. The China Enterprises Index of the top Chinese listings in Hong Kong also gained 0.2 percent.
In the mainland, the CSI300 of the top Shanghai and Shenzhen A-share listings climbed 0.3 percent, while the Shanghai Composite Index was up 0.5 percent.
Both indexes pared gains after a private preliminary survey showed growth in China's manufacturing sector in February slipped to its lowest in four months.
Gains also came in the weakest Shanghai volume since Christmas Eve as China's money rates rose across the board on Monday after the People's Bank of China signalled that it would drain more funds from the market via its open market operations on Tuesday, traders said.
The CSI300 saw its worst weekly loss since July 2010 last week, with offshore China markets suffering steep losses as well, on fears of more tightening after the Chinese central bank moved to aggressively drain funds from the interbank market.
“It's a waiting game at the moment, with the US Fed chief testimony on Tuesday and the outcome of the elections in Italy due to come. We're not sure if this is the bottom,” said Jackson Wong, Tanrich Securities' vice-president for equity sales.
“But a strong mainland market will help. Investors will be looking out for details of proposed policy changes leading up to China's annual parliamentary meetings next week,” Wong added.
Caijing magazine reported that plans for a reform in governmental departments have been drafted and will be discussed at the second plenum meeting of the Communist Party Central Committee later this week, ahead of next week's annual parliamentary meetings.
On Monday, Chinese property shares dived after the official China Securities Journal reported that Beijing is likely to unveil new property tightening measures before the annual National People's Congress on March 5.
The newspaper report listed expanding property taxes and implementing limits on house purchases in more cities as two possible measures, which while not new, rattled investors.
Shares of China Vanke, the country's largest developer by sales, shed 2.7 percent in Shenzhen, Poly Real Estate slid 2.1 percent in Shanghai, while China Resources Land slid 1.4 percent in Hong Kong.
The Hong Kong property sector was also weaker after the city government imposed higher stamp duties and home loan curbs on property transactions late last Friday in a sixth round of policy measures to cool an overheated property sector.
Property agent Midland Holdings dived 4.4 percent, but finished the day near the day's highs. Sun Hung Kai Properties lost 1.3 percent, while Cheung Kong Holdings slipped 0.6 percent.
Analysts expect the new cooling measures to only have a short-term effect on property transactions and said Hong Kong's government is likely to launch further housing curbs in the near future.
EARNINGS IN FOCUS
Corporate earnings are a growing focus. Just under a tenth of Hong Kong-listed companies tracked by Thomson Reuters StarMine have reported 2012 earnings and initial data suggests there could be more misses than beats in the 2012 results season.
In Hong Kong, 53 percent of the companies that have reported so far have missed expectations, with the biggest disappointments among industrials and materials.
Among those that posted results on Monday, ANTA Sports ended up 1.2 percent, paring gains after posting at midday a 21.5 percent decline in its 2012 full year net profit, largely in line with expectations.
Shares of insurer AIA Group hovered near all-time highs, rising 1.1 percent on the day. Now up 6.6 percent on the year, AIA is currently trading at a 10 percent premium over its historical 12-month forward earnings multiple as investors opt for its perceived earnings safety.
According to StarMine, three of 17 analysts upgraded their forecasts for AIA's full year 2012 earnings by an average of 23.7 percent in the last 30 days. AIA is due to post its earnings results on Wednesday.
Also stronger on Monday was Europe's largest bank and Hang Seng Index heavyweight HSBC Holdings, up 0.4 percent. Chinese banks, among the hardest hit last week, were among the top index boosts.
Chinese brokers rose, with Haitong Securities
up 1 percent in Shanghai and 0.8 percent in Hong Kong after the official China Securities Journal reported an expansion of a short selling pilot scheme from February 28. - Reuters