China shares listed in HK turn positive for year, outshine onshore markets
* HSI +0.3 pct, H-shares +0.8 pct, CSI300 -0.1 pct
* PBOC officials reform comments hurt smaller Chinese lenders
* Re-rating of Chinese equities unlikely in near term: BAML's Cui
* Hong Kong property buoyed by dovish Bernanke comments
HONG KONG, Nov 20 (Reuters) - A key index of Chinese shares listed in Hong Kong crept into positive territory on the year early on Wednesday, helped by strength in China's largest banks and insurers after supportive comments on financial reform plans from senior central bankers.
Chinese mid-sized lenders broadly underperformed on fears deposits will come under pressure after a vice-governor at the People's Bank of China said that Beijing will lift controls on deposit rates when conditions are ripe.
By midday, the China Enterprises Index of the top Chinese listings in Hong Kong was up 0.8 percent to turn positive for the year for the first time since early March, now up 0.2 percent. Gains on the day were, however, again capped by chart resistance at March highs.
If gains hold, this will be its fifth-straight daily gain, but the fourth in five days for the Hang Seng Index, which rose 0.3 percent on the day to 23,736.9 points. It is now just shy of the year's intra-day high at 23,944.7 and up 4.8 percent in 2013.
The Shanghai Composite Index and the CSI300 of the top Shanghai and Shenzhen A-share listings ended a choppy morning session down 0.1 percent. They are still down 3.4 and 4.5 percent on the year, respectively.
H-shares are now trading at its biggest premium over A-shares since January 2011.
"The H-share rally in the last few days was a little more than I'd expected, but it's likely due to a combination of ample global liquidity and investors being underinvested in Chinese equities before that," said David Cui, Bank of America Merrill Lynch's chief China equity strategist.
He added that a re-rating of Chinese equities is unlikely in the near term, expecting China's financial system to remain unstable in the next year or two as authorities clean up the effects of the stimulus rolled out in the aftermath of the 2008-09 financial crisis.
Cui was the top-ranked China equity strategist in Institutional Investor's annual research rankings for a third-straight year in 2013, the publication said late on Tuesday.
On Wednesday, China Life Insurance rose 1.7 percent to its highest since mid-February in Hong Kong.
It has now jumped more than 20 percent from a Nov. 13 trough, prodding its relative strength index (RSI) to its highest in more than 10 months, suggesting it is now at its most technically overbought since then.
China Construction Bank (CCB) spiked 1.3 percent, while shares of smaller rivals China Minsheng Bank and China Merchants Bank slipped 0.6 and 0.2 percent in Hong Kong, respectively.
Merchants Bank, Minsheng Bank and Industrial Bank were among the top drags on the CSI300 index, each sliding just under 1 percent. There were also broad losses for most of the financial sector.
Comments from Chinese central bank chief Zhou Xiaochuan seen on Tuesday also touched on quickening the process of full yuan convertibility, while the country's securities regulator tempered expectations of a resumption of new listing approvals.
"There's some profit taking going on right now and others are rotating into counters that have lagged the rally earlier this week," said Jackson Wong, Tanrich Securities' vice-president for equity sales.
Hong Kong markets were further buoyed by dovish comments from outgoing U.S. Federal Reserve Chairman Ben Bernanke that further eased fears that the central bank may soon reduce its asset purchasing scheme, triggering some short covering in rates-sensitive counters, traders said.
Hong Kong property developers New World Development rose 1.3 percent, while Link Real Estate Investment Trust (REIT) climbed 2.1 percent.