Hong Kong shares up, China down

Financial counters led a broad rebound in Hong Kong shares on Wednesday, as risk appetite improved with traders settling their positions for the end of the first quarter. Hutchison Whampoa Ltd , billionaire Li Ka-shing's flagship ports-to-telecoms company, soared 5.1 percent to a 3-week high after it posted a forecast-bearing 2010 earnings partly driven by a turnaround in its 3G telecommunications arm. It climbed as much as 5.4 percent in early trade.
All eleven financial counters in the benchmark Hang Seng Index gained, with China Construction Bank, Industrial and Commercial Bank of China , HSBC and Bank of China the leading lights. Hong Kong's main stock index finished up 1.7 percent to 23,451.4, reversing two days of losses after gaining 3.8 percent last week. This caution was evident on the China markets, which also felt lingering worries over further monetary tightening, possibly next month. The Shanghai Composite Index closed down for a second consecutive day, edging down 0.1 percent to 2,955.8 on Wednesday, following a 0.9 percent dip on Tuesday.
The official China Securities Journal said on the front page that higher-than-expected liquidity was likely to push the People's Bank of China to carry out more tightening policies in April. The Hang Seng Finance Sub-index, containing the 11 financial contituents of the benchmark, is up 1.4 percent for the quarter so far, underperforming the 1.8 percent uptick on Hong Kong's main stock index.
Weighing on the quarterly performance of financials are the two Chinese insurance counters, China Life, down 9.8 percent and Ping An Insurance (Group) Co of China Ltd, down 11.2 percent on the quarter so far. Ping An gained 2.8 percent on Wednesday even after reporting fourth-quarter 2010 earnings that lagged expectations.
The Shanghai index is likely to consolidate under the key 3,000-point resistance level in the short-term,s aid Zhang Yanbin, an analyst at Zheshang Securities in Shanghai, adding that inflation and policy concerns "are also keeping investors cautious." Agricultural Bank of China , the country's No 3 lender by assets, rose 0.4 percent, after it reported a forecast-beating 83 percent rise in 4th-quarter profit late Tuesday. And China's Shanghai Pudong Development Bank Co was up 1.7 percent after the mid-sized lender said it planned to issue up to 50 billion yuan ($7.6 billion) in subordinate debt from now to 2013. It also posted a 45 percent rise in 2010 net profit.
The Shanghai index was also weighed down by profit-taking in some selective shares that had recently outperformed the market in speculative trade. Heilingjiang Interchina Water, the biggest loser in Shanghai, dropped 7.8 percent, after rallying 18.6 percent in seven trading days.