Hong Kong, China shares struggle as policy meeting awaited

Clement Tan
Tuesday, 5 Nov 2013 | 11:43 PM ET

* HSI +0.3 pct, H-shares -0.2 pct, CSI300 -0.4 pct

* Banks, property A-shares weak, hawkish official comments weigh

* Sinopec jumps after parent announces buyback plan

* Auto makers sink after Beijing's 2014 sales quota cut

HONG KONG, Nov 6 (Reuters) - Hong Kong and China shares struggled on Wednesday with many investors sticking to the sidelines ahead of a fresh batch of Chinese macroeconomic data starting on Friday and a key Communist Party policy meeting.

By midday, the Hang Seng Index inched up 0.3 percent, while the China Enterprises Index of the top Chinese listings in Hong Kong slipped 0.2 percent.

The H-share index again wavered at its 200-day moving average, a technical level that it has not been able to break up decisively for nearly two months.

The CSI300 of the leading Shanghai and Shenzhen A-share listings was down 0.4 percent, while the Shanghai Composite Index was flat in anemic volume.

"The plenum meeting is definitely on people's minds, which is affecting market turnover," said William Fong, who helps manage $3 billion worth in assets in a series of China-Hong Kong equity funds for Barings Asset Management.

"Recent earnings have also been a mixed bag, with some companies seeing more margin pressures as the low base effect from earlier this year eases," Fong added.

The elite Central Committee of China's ruling Communist Party holds a closed-door meeting from Nov. 9-12 to set the country's economic agenda for the next decade.

On Wednesday, the Chinese banking and banking sectors were key drags in the onshore markets after the People's Bank of China (PBoC) said in its third quarter report that it will "resolutely rein in" speculative property demand.

The central bank also said prices need to be watched closely, suggesting consumer inflation may rise in the fourth quarter. This follows published comments from the China Premier Li Keqiang from late on Monday, warning against further expanding already loose monetary policies.

Industrial Bank tested a two-week low in early trade, falling 2.2 percent in Shanghai. China Vanke, the country's largest property developer by sales, slid 1.5 percent in Shenzhen and have now shed 3.5 percent this week.

Bank of Chongqing made a subdued listing debut in Hong Kong, little changed from its HK$6 IPO price. Another Chinese bank, Huishang is expected to raise about $1.2 billion after pricing its Hong Kong listing near the bottom of an expected range.

Auto makers sank after China's capital said it will slash the city's new car sales quotas by almost 40 percent next year, as it looks to curb vehicle emissions and hazardous levels of pollution.

Great Wall Motor dived 3 percent in Hong Kong and 2.2 percent in Shanghai. SAIC Motor sank 3.1 percent in Shanghai, while Chongqing Changan Auto tumbled 4 percent in Shenzhen.

However, China Oilfield Services surged 6 percent to its highest since March 2011 in Shanghai and 2.5 percent to near a record high in Hong Kong, buoying sector peers.

Analysts at Morgan Stanley and China International Capital Corp (CICC) put out notes on Wednesday flagging the company's more aggressive capital expenditure this year and next and its expectation that spending by its key client CNOOC will rise in the coming years.

China Petroleum and Chemical (Sinopec) Corp rose 3.3 percent in Shanghai after its parent started a plan to buy back a percent stake over the next year.

Shale gas explorer Kunlun Energy climbed 2.2 percent to its highest in more than three months.

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