January 3, 2019 / 4:36 AM / 6 months ago

China stocks flat as investors hedge their faith in economy

* SSEC unchanged, CSI300 -0.1 pct; HSI -0.3 pct

* Liquidity support for small businesses amid weaker macro data

* Apple Inc suppliers tremble after company cuts forecast

HONG KONG, Jan 3 (Reuters) - Chinese shares were little changed on Thursday as the market dithered between worrying about weaker economic growth and betting on policy support to buffer that slowdown. ** The major indices hovered around Wednesday’s closing levels in late morning trade, as worries about economic growth and expectations of policy support pulled the market in opposite directions. ** The People’s Bank of China said on Wednesday evening that it has relaxed its conditions on targeted reserve requirement cuts to benefit more small firms. The move came after China reported its first factory activity contraction in over two years in December. ** The Shanghai Composite index was flat at 2,465.36 while the blue-chip CSI300 index inched down just shy of 0.1 percent. ** CSI 300’s financial sector sub-index was higher by 1 percent, while the energy index climbed close to 0.1 percent, but telecoms shares lost 2 percent, and consumer staples index slid 1.6 percent. ** Chinese H-shares listed in Hong Kong were lower by just 0.1 percent, while the Hang Seng Index eased less than 0.3 percent to 25,057.76. ** The smaller Shenzhen index and the start-up board ChiNext Composite index softened by 0.3 percent. ** Apple Inc made a rare cut to its quarterly sales forecast on Wednesday, and, for the first time since the iPhone was launched in 2007, issued a warning on its revenue guidance ahead of releasing quarterly results. ** Apple suppliers in Asia suffered in early trade. . The Hang Seng’s sub-index tracking I.T. hardware makers shed 1.9 percent. ** Although “there is some impact in Apple concept stocks, most people care more about macro data,” said Zhang Gang, a Shanghai-based analyst at Central Securities. “Now people are focusing on the policies that may buffer slower economic growth.” ** Shares of securities companies, which do well when share prices are expected to jump, rallied 2.6 percent in morning trade. This could foreshadow a wider rebound in A-shares in the coming months. “If the market warms up this year, these brokerages will benefit first,” Zhang added. ** Jim McCafferty, head of equity research, Asia ex-Japan at Nomura, also noted that this year may be less gloomy than the last. “The Chinese market, having delivered a dismal 2018, is one of the least expensive markets globally,” he said. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.4 percent while Japan’s Nikkei index was down 0.3 percent. ** At 04:07 GMT, the yuan was quoted at 6.8760 per U.S. dollar, 0.2 percent weaker than the previous close of 6.8620. ** The largest percentage gainers in the main Shanghai Composite index were Pengqi Technology Development Co Ltd, up 10.1 percent, followed by Wuxi New Hongtai Electrical Technology Co Ltd and Changshu Fengfan Power Equipment Co Ltd , both up by 10 percent. ** The largest percentage losses in the Shanghai index were Thalys Medical Technology Inc, Kangmei Pharmaceutical Co Ltd and Ribo Fashion Group Co Ltd , all down by 10 percent. ** In Hong Knog, the top gainer on the Hang Seng was Sino Land Co Ltd, up almost 4 percent, while the biggest loser was Geely Automobile Holdings Ltd, down 8.3 percent.

Reporting by Noah Sin; additional reporting by Andrew Galbraith in Shanghai; Editing by Gopakumar Warrier

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