Hong Kong shares slip, Shanghai hits a 3-1/2 year low
(Updates to close)
* HSI off 0.1 pct, Shanghai Composite down 1 pct
* Turnover in HK and Shanghai still very weak
* Evergrande hurt by falling margins in H1 earnings
* Want Want down 4.2 pct despite 38 pct rise in 1H net
By Clement Tan and Vikram Subhedar
HONG KONG, Aug 29 (Reuters) - Hong Kong shares slipped on Wednesday, dragged down by a 4.2 percent loss for foodmaker Want Want China, which was heavily traded on a day turnover was weak ahead of Friday's meeting of central bankers in Wyoming.
Investors focused on companies that just posted earnings reports. With the slowdown in the Chinese economy not likely to bottom in the near term, companies across sectors are struggling with big inventories as demand slows.
Mainland Chinese markets underperformed after the People's Bank of China surveyed demand for a new long-term money market instrument, suggesting it remained reluctant to resort to blunter policy measures such as reducing bank reserve requirements.
This apparent lack of aggressive policy disappointed market players, who see any "formal" easing measures as crucial to shoring up onshore Chinese markets.
The Shanghai Composite Index slid 1 percent to 2,053.2, its lowest close since February 2009. The CSI300 of the top Shanghai and Shenzhen listings shed 1.1 percent.
The Hang Seng Index closed down 0.1 percent at 19,788.5, bouncing off its 200-day moving average for a third straight day. That support is now at about 19,766, a level it has closed above for all but one session for almost a month.
There was one big trade, thanks to Macau casino operator Galaxy Entertainment, in which European private equity firm Permira sold a $750 million stake.
Otherwise, Hong Kong turnover remained weak ahead of the Friday's meeting of central bankers hosted by U.S. Federal Reserve Chairman Ben Bernanke.
"Everybody's waiting, but I think Bernanke and the other central bankers are limited in what they can do to boost growth," said Wang Ao-chao, UOB Kay Hian's Shanghai-based head of research.
"Chinese companies are at various stages of the destocking cycle right now, but in the longer run, they need to be making capacity adjustments which is difficult to do now, with the economic situation uncertain," he added.
Highlighting inventory issues, shares of Chinese developer Evergrande fell 3.1 percent after the company reported falling margins due to price cuts as they struggle to sell homes.
Evergrande is now down 4 percent in 2012, dipping into negative territory for the year after data on July 18 showed housing prices in China increasing for the first time in nine months.
This sparked fears of more curbs on a sector Beijing is bent on exempting from their easing regime.
WANT WANT NOT IN DEMAND, CHINA LIFE RISES
Chinese rice cracker producer Want Want China slumped 4.5 percent, with losses accelerating in the afternoon in spite of the fact it posted a better-than-expected 38 percent increase in first half net profit at midday.
In a note to clients on Wednesday, Bank of America-Merrill Lynch analysts said Want Want's 19 percent revenue growth was below their estimate due to weaker sales from rice crackers.
Losses on Wednesday trimmed Want Want's outperformance on the year. It is still up 25 percent in 2012, compared to Hang Seng Index's 7.3 percent gain.
China Life Insurance trimmed gains after its chairman told reporters at a briefing during the midday trading break that the company does not see promising prospects for improving investment yields this year.
It ended up 2 percent, but was up by more than 3 percent at midday after posting late on Tuesday a smaller-than-expected 20 percent decline in first half net profit. Earnings were hurt by a sluggish stock market in the mainland, where the company is allowed to invest up to 20 percent of its assets.
The South China Morning Post reported on Wednesday that China Life is aiming to increase its stake in China Guangfa Bank. The company's chairman told the press briefing the company's plans were not finalized. (Additional reporting by Clare Baldwin; Editing by Richard Borsuk)
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