* HSI +0.6 pct, H-shares +1.3 pct, CSI300 +0.9 pct
* HSI set to outperform A-shares for 6th straight month
* China equities see 11th straight week of net flows: EPFR
* HKEx down 1 pct after $1 bln new share issue to fund LME
By Clement Tan
HONG KONG, Nov 30 Mainland Chinese shares were
set for their first gain this week on Friday, joining Hong Kong
by advancing ahead of data due over the weekend expected to show
that China's factory activity expanded at its fastest pace in
seven months in November.
Hong Kong shares were set to show a gain for the third month
in a row, outperforming onshore markets for a sixth straight
month and extending a divergence that has reversed the premium
that A-shares typically trade over H-shares.
On Friday, the Hang Seng Index went into the midday
trading break up 0.6 percent at 22,051.4 points, while the China
Enterprises Index of the top Chinese listings in Hong
Kong rose 1.3 percent. They are up 1.9 and 0.4 percent on the
On the mainland, the CSI300 Index of the top
Shanghai and Shenzhen listings climbed 0.9 percent, while the
Shanghai Composite Index rebounded 0.6 percent from its
lowest closing level since January 2009, set on Thursday.
They were down 5.3 and 4.6 percent this month, respectively.
"Fund managers in the mainland are not sure the A-share
market has bottomed and are looking for ways to switch to
H-shares or other higher-yielding investment vehicles," said
Edward Huang, chief strategist at Haitong International
"They are also beginning to think about switching out of the
sectors that have outperformed this year, but investors
shouldn't expect too much from policy reforms from China's
annual central economic meeting in mid-December," Huang added.
Data from EPFR Global, a firm that tracks global fund flows
and asset allocation, showed China equities had an eleventh week
of net inflows last week, amid the largest equity inflows
globally last week in two years, according to Bank of
America-Merril Lynch analysis.
On Friday, the Chinese property sector, which has
outperformed strongly this year, was once again strong. China
Resources Land jumped 5.3 percent to HK$21.05, taking
its gains on the year to 69 percent.
Chart resistance is seen at HK$20.85, which is its previous
high recorded on Oct. 21, 2009.
Chinese growth-sensitive plays were also broadly stronger.
Anhui Conch Cement, the largest cement producer in the
mainland, jumped 3.4 percent in Hong Kong and 4.9 percent in
China's official purchasing managers' index (PMI) in
November may have rebounded to 50.6 from October's 50.2, the
median estimate of 11 economists polled by Reuters showed. A
reading above 50 points points to accelerating activity.
ALCOHOL KEY IN AWFUL A-SHARE NOVEMBER
A contamination scare last week involving Jiugui Liquor
worsened losses on the month for the alcohol sector,
after repeated anti-corruption calls by China's top leaders in
the lead up to the 18th Communist Party Congress earlier this
month put pressure on a sector that had been outperforming.
Jiugui Liquor slid 2.2 percent on Friday. It has now lost a
third of its market cap since it resumed trading last Friday
after a four-day suspension following press reports alleging its
products contained excessive toxic materials.
Sector heavyweight Wuliangye was down 1 percent
on Friday, bringing its losses to 20 percent in November, its
worst monthly performance in more than four years.
Kweichow Moutai was up 28 percent on the year at
the end of October, but losses exceeding 13 percent in November
have trimmed its annual gain to 11.3 percent.
The brokerage sector, which was hit by speculation of
possible commission fee cuts that could further hurt their
profitability, was mixed despite local media reporting otherwise
on Friday, citing unnamed officials from China's securities
Larger brokerages such as Citic Securities
recovered, rising 0.8 percent in Shanghai, but smaller players
stayed weak. The sector broadly rebounded in Hong Kong, with
Citic up 1.9 percent in strong volumes.
Hong Kong Exchange (HKEx) shed 1 percent to
HK$123.60 after it raised $1 billion to fund its takeover of the
London Metal Exchange. A new issue of 65.705 million shares was
priced at HK$118 each, a 5.45 percent discount to its closing
price on Thursday.
The Hong Kong government said in late morning trade on
Friday that it will subscribe to $58 million worth of new HKEx