China shares rise on strength in blue-chip shares, HK weak

Yashili International Holdings

03/11/2014 04:48

* HSI -0.1 pct, H-shares -0.4 pct, CSI300 +0.6 pct 
    * Institutional investors buy into undervalued blue-chip 
shares 
    * Merger and acquisitions plans of SOEs attract funds 
    * Hong Kong shares fall on profit-taking, but see resistance 
 
    By Chen Yixin and Pete Sweeney 
    SHANGHAI, Nov 3 (Reuters) - China shares hit a multi-month 
high on Monday, supported by sustained strength in blue-chip 
brokerages and steel firms, while Hong Kong markets fell as 
profit-taking emerged after the recent solid gains. 
    The Shanghai Composite Index  .SSEC  rose 0.6 percent to 
2,435.0 points by the midday break, the highest level since 
February last year, while the CSI300  .CSI300  of the leading 
Shanghai and Shenzhen A-share listings gained 0.6 percent, 
hitting a 14-month high. 
    "I can see some institutional investors start to buy into 
undervalued blue-chips, including brokerages and steel shares, 
given supportive government policies and merger and acquisitions 
among stated-own enterprises," said Xiao Shijun, analyst at 
Guodu Securities in Beijing. 
    Guangzhou Shipyard International Ltd  600685.SS  0317.HK  
soared its 10 percent daily limit in the mainland market and 
58.8 percent in the Hong Kong market as the company said on 
Friday that it would buy Huangpu Wenchong yard, which builds 
military and marine engineering vessels, from its parent China 
State Shipbuilding Corp  SASACN.UL  for 4.53 billion yuan ($741 
million) via share issuance and cash. 
    The share will be eligible for trading on the forthcoming 
stock connector between Hong Kong and Shanghai, and will become 
the first military industry-related firm with a dual listing. 
 ID:nL6N0ST02N  
    Almost all brokerages gained on Monday, with Industrial 
Securities Co  601377.SS  gaining 5.1 percent and Haitong 
Securities Co  600837.SS  up 1.1 percent. 
    Maanshan Iron & Steel Company  600808.SS  and SGIS Songshan 
 000717.SZ  hit their 10 percent daily limit.  
    In Hong Kong, profit-taking dragged the index lower, with 
the Hang Seng Index  .HSI  down 0.1 percent at 23,973.82 points 
and the China Enterprises Index  .HSCE  of the top Chinese 
listings in Hong Kong down 0.4 percent. 
    Analysts said the market was meeting resistance as Hang Seng 
index neared its 50-Day Moving Average.  
    "Investors have taken some profits from last week's gain," 
said Sam Chi Yung, strategist at Delta Asia Financial Group in 
Hong Kong. "There was also some impact from Japan and Europe's 
QE (Quantitative Easing) programmes, but the influence is very 
limited." 
    Standard Chartered Plc  2888.HK  plunged 2.3 percent to its 
lowest level since mid 2009, after the company was placed under 
investigation by U.S. authorities for potential sanctions 
violations connected to its banking for Iranian-controlled 
entities in Dubai.  ID:nL1N0SQ34W  
    Mengniu Dairy  2319.HK  extended gains from last week after 
Danone SA  DANO.PA  announced that it would buy a 25 percent 
stake in Mengniu's Yashili International Holdings Ltd  1230.HK  
for $550 million.  
(1 US dollar = 6.1168 Chinese yuan) 
 
 (Additional reporting by Shanghai Newroom; Editing by Simon 
Cameron-Moore) 
 ((yixin.chen@thomsonreuters.com; +86 21 61041713; Reuters 
Messaging: yixin.chen.thomsonreuters.com@reuters.net)) 
 
Keywords: MARKETS CHINA STOCKS/MIDDAY