HONG KONG, Apr 10: China shares reversed early gains on Wednesday, paring strength in Hong Kong markets after data showed the world’s second-largest economy unexpectedly slipped to a trade deficit in March, with money supply and loan growth data due next.
China posted a $884 million trade deficit in March as a forecast-busting 14.1 percent year on year surge in imports eclipsed export growth of 10 percent, falling just short of an expected 10.5 percent rise.
The CSI300 of the leading Shanghai and Shenzhen A-share listings ended a choppy morning session down 0.6 percent, while the Shanghai Composite Index slipped 0.3 percent, struggling at its 100-day moving average for a third day.
The Hang Seng Index inched up 0.2 percent to 21,910.2 and went into the midday trading break off the day’s highs, while the China Enterprises Index of the top Chinese listings in Hong Kong also crept 0.2 percent higher.
‘Market reaction to the data today is kind of muted. If you view the trade data along with weak producer prices, it would suggest producers still lack pricing power because of chronic oversupply,’ said Hong Hao, chief strategist at Bank of Communication International Securities.
The Hang Seng Index is now 8 percent off a Jan. 30 peak, while the China Enterprises has tumbled 14 percent from a Feb. 1 high. The Shanghai Composite has lost 9 percent from a Feb. 6 high, while the CSI300 has slid 11 percent from Feb. 7.
‘Japan is a factor, but people are still not coming back into China equities after the pull back mainly because they are still not seeing much signs of a more solid recovery in the mainland,’ Hao added.
More economic data is expected later this week, with March money supply and loand growth due by April 15. First quarter GDP growth data is due on that same day along with industrial output, retail sales and urban investment data for March.
Data on Tuesday had showed China’s annual consumer inflation cooled in March as food prices eased from nine-month highs and producer price deflation deepened, leaving policymakers room to keep monetary conditions easy and nurture a nascent recovery.
On Wednesday, growth-sensitive banking and energy counters were broadly weaker. In Hong Kong, oil giant CNOOC Ltd slid 1.4 percent, plumbing seven-month lows. China Minsheng Bank shed 2.8 percent in Hong Kong and 0.8 percent in Shanghai.
Chinese brokerages fell in the mainland after the official China Securities Journal reported that regulators are likely to bar a leading brokerage firm in southern China from sponsoring initial public offerings for three months on suspected fraud in one of its IPO projects.
In Shanghai, Founder Securities tumbled 4.3 percent in Shanghai, while larger sector rival Citic Securities fell 1.4 percent and Haitong Securities shed 1.1 percent.
CHALCO JUMPS
China coal counters were lower after strong gains on Tuesday as investors rotated into Aluminum Corporation of China (Chalco) , following an upgrade from ‘sell’ to ‘hold’ by Deutsche Bank analysts.
The bank’s global commodity team went long on aluminum and short on copper in its quarterly report, forecasting the end of copper supply scarcity and the re-rating of copper against aluminum.
Chalco jumped 4.1 percent in Hong Kong, trimming losses on the year to 15 percent. Its Shanghai listing surged 5.4 percent. China Shenhua Energy Co Ltd, the country’s largest coal producer, shed 1.5 percent in Hong Kong.
China Overseas Land climbed 2.2 percent, leading other Chinese developers higher after it said its total contracted sales in the first quarter amounted to about 40 percent of its 2013 target after posting a 36 percent month on month rise in contracted sales in March.
Chinese premium alcohol producers Kweichow Moutai jumped 3.5 percent in Shanghai, while Wuliangye surged 4.2 percent in Shenzhen after local news reports suggested plasticizer standards will soon be relaxed.
The sector has been hard hit by the anti-corruption focus of the new China leadership and a contamination scare late last year following reports that a maker of white spirit added more plasticisers to its products than industrial standards allow.
(AGENCIES)
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