* SSEC +0.8 pct, CSI300 +1.1 pct, HSI +0.3 pct
* Non-cyclical stocks rally on pension funds hopes
SHANGHAI Feb 20 China shares rebounded on
Monday, led by wine makers and banks, after media reports said
pension funds may begin flowing into the country's stock markets
as early as this week.
The bullish sentiment spread to Hong Kong, where the market
also advanced but by a more modest margin.
China's CSI300 index rose 1.1 percent to 3,457.94
points by the end of the morning session, while the Shanghai
Composite Index gained 0.8 percent to 3,227.33,
recouping losses on Friday.
Blue chips were on pace for their best single-day
performance since Nov. 11, if the gains could be sustained.
Media reported on Friday China had started investing an
initial 360 billion yuan ($52.42 billion) in pension insurance
funds from seven provinces and cities in financial markets.
The first tranche of that investment was expected to flow
into the stock market as early as this week, state media
reported on Monday.
Cao Xuefeng, head of research at Huaxi Securities in
Chengdu, said non-cyclical stocks such as pharmaceuticals and
wine makers would benefit most from the pension fund investment,
as "insurance firms prefer stocks with stable returns."
He also said regulatory moves to restrict "excessive" and
frequent" fundraising by some listed companies on late Friday
would help contain speculation and boost optimism toward
Sectors gained ground across the board in the mainland
Wine makers were popular bets, with an index tracking the
liquor sector rallied 3.6 percent at midday, as the
industry has been gradually recovering from President Xi
Jinping's graft clampdown and the plasticizer scandal since
Shanghai Bailian Group Co Ltd jumped 10 percent,
the maximum allowed, to a 13-1/2-month high, on news of a tie-up
with Alibaba Group Holding Ltd.
In Hong Kong, the benchmark Hang Seng index added 0.3
percent to 24,111.85, while Hong Kong China Enterprises Index
gained 0.8 percent to 10,439.67.
Southbound flows through the Shanghai-Hong Kong Stock
Connect recovered slightly on Monday after accounting for a mere
2.2 percent of Friday's daily quota, down sharply from an
average of 24 percent in the previous five sessions.
Most sectors gained ground in the city, but property sector
shed 0.1 percent ahead of a busy week for U.S. Federal
Market expectation of a U.S. interest rate hike in March are
curbing the demand for real estate stocks as the city's
borrowing costs closely track that of the United States due to a
currency peg to the greenback.
($1 = 6.8670 Chinese yuan renminbi)
(Reporting by Jackie Cai and John Ruwitch; Editing by Kim