Hong Kong and China stocks dip

Hong Kong and China shares fell on Thursday on fears Chinese inflation in March quickened faster than expected, sparking concerns of a possible further increase in the reserve requirement for mainland banks. Mainland banking shares dragged down the Hang Seng index, while property stocks pulled the Shanghai Composite index down as volumes in Hong Kong fell for the fourth day in a row to the lowest since March 29.
Hong Kong media reported on Thursday that China's annual inflation accelerated to a 32-month high of between 5.3 and 5.4 percent in March from 4.9 percent in February. The reports came a day before the statistics are due to be officially released. Such a reading would be slightly higher than the Reuters poll forecast of 5.2 percent.
Kaan said the outlook for Chinese shares remained positive pointing to the fact that money from the real estate market will eventually find its way to stocks as authorities try to clamp down on property prices.
The Hang Seng Index ended down 0.5 percent at 24,014.0 on Thursday, after bargain hunters had lifted the benchmark up 0.7 percent on Wednesday. The China Enterprises Index lost 0.6 percent to close at 13,481.7. Among the large mainland banks, China Construction Bank Corp, Industrial & Commercial Bank of China Ltd and Bank of China Ltd slipped by more than 1.1 percent.
Bernstein Research banking analyst Mike Werner in Hong Kong, who favours large banks over mid-sized peers, still rated CCB and ICBC as "outperform", with the former as his top pick in the sector. Agricultural Bank of China Ltd (ABC), while not a benchmark constituent stock, bucked the trend as it finished up 2.2 percent, with volume seen at 1.6 times its 30-day average.
China's main stock index ended down 0.3 percent on Thursday, weighed by the government's renewed focus on containing asset prices and on the inflation reports. The benchmark Shanghai Composite Index edged lower to 3,042.6 points, after a 1 percent rise on Wednesday. Property shares eased 0.8 percent after Premier Wen Jiabao said the government would use all tools to stabilise prices, including the red-hot property market. Agriculture issues outperformed due to increasing demand for exports to Japan after its earthquake, analysts said. Food manufacturers such as Shandong Oriental Ocean Sci Tech was the biggest gainer on the Shenzhen market, jumping its 10 percent daily limit, while Gansu Dunhuang Seed rallied 5 percent.