Hong Kong shares rose today as local property issues were buoyed by favourable corporate earnings, with benchmark indices poised for their third-straight monthly gain.
Chinese property stocks were weaker, cutting gains in Hong Kong and dragging mainland markets into the red, after Shanghai reaffirmed its commitment to real estate curbs, dismissing expectations that the city will ease restrictions on
property purchases.
The Shanghai Composite Index retreated 0.6 per cent from a more than three-month high to 2,437.4 at midday, with the gauge of property stocks the standout underperformer, down 2.5 per cent.
The China Enterprises Index of the top mainland listings in Hong Kong rose 0.6 per cent. The broader Hang Seng Index gained 0.5 per cent to 21,681, after briefly testing 21,725.6, the top of a gap that opened up between August 4th and 5th.
On the month, both the Hang Seng Index and the Shanghai benchmark are up 6.3 per cent to date, outpacing the China Enterprises Index's 4.7 per cent gain.
"The Chinese property sector has been susceptible to news flows lately, but it could add to gains this year since it is likely to benefit from an easing of policy. Country Garden's earnings also surprised many on the upside," said Peter So, CCB International's co-head of research.
Country Garden Holdings Co Ltd, China's fifth-largest developer by sales value, posted 2011 net profit of 5.81 billion yuan on Tuesday, bettering a 5.32 billion yuan Thomson Reuters I/B/E/S consensus.
Country Garden was down 3 per cent at midday after the Shanghai housing regulator's move, but it is still up 22 per cent in 2012 so far, outstripping the 17.6 per cent gain on the Hang Seng Index. In Shanghai, Poly Real Estate lost 2.7 per cent in midday volume equal to its 30-day average. Shenzhen-listed China Vanke slipped 2.5 per cent.
Property-related sectors, such as construction and cement, were also weak. Anhui Conch Cement lost 2.2 per cent in Shanghai and 0.9 per cent in Hong Kong.
In Hong Kong, corporate earnings continued to be a focus, with several blue-chip names eyed. Sun Hung Kai Properties Ltd, Asia's largest property developer by market value, gained 0.9 per cent after reporting late on Tuesday. Underlying profit for its fiscal first half topped expectations.
New World Developments Co Ltd was down 0.8 per cent and Hong Kong Exchanges and Clearing Ltd (HKEx), the world's largest exchange operator by market value, gained 0.5 per cent before posting corporate earnings at the midday break. HKEx posted a market-matching 1 per cent rise in 2011 net profit, while New World Developments reported an underlying profit for its fiscal first half that beat expectations.
Ahead of its earnings due after markets close today, Macau casino operator SJM Holdings Ltd rose 1.5 per cent. In a note to clients on Tuesday, Citibank China equity strategists said downside risks to corporate earnings should be limited but uneven among sectors, with upstream and monopolised sectors seeing better margins.
Chinese automaker BYD rose 1.8 per cent in Hong Kong after reporting a 2011 net profit of 1.4 billion yuan ($222million), 44 per cent less than a year earlier, but beating a Thomson Reuters I/B/E/S consensus of 938 million yuan.
