Hong Kong shares slip; China's index flat

Hong Kong shares suffered a third-straight loss on Wednesday, with financial and resources-related sectors weak ahead of data that could suggest the slowdown in China will last beyond the first quarter. Mainland Chinese markets reversed early losses, as strength in property stocks helped the Shanghai Composite Index eke out a 0.1 percent. The CSI300 Index that also tracks some Shenzhen listings was flat.
The China Enterprises Index shed 0.9 percent, while the broader Hang Seng Index closed down 1.1 percent at 20,140.7, finishing at the top of its range one day after flirting with its 200-day moving average. The benchmark has not broken below this technical level, currently seen at about 20,018.1, since February 1. If the benchmark closes below this chart support level in high volumes, it could trigger heavier losses.
Turnover in both markets stayed lacklustre, with the property accounting for a sizable chunk in Shanghai as investors cheered encouraging March sales figures for a sector central to the prospects for improvement in China's economy. "I would be more cautious, though. I don't think the market is expecting Beijing to loosen monetary policy too soon or in an aggressive fashion, let alone the property sector," said Edward Huang, an equity strategist at Haitong Securities International.
Markets have been weak this week on patchy data from bank lending and inflation to industrial production and trade that have doused expectations Beijing could ease up on monetary policy, but one area in particular raises the risk that the downward drift will extend into the second quarter.
Beijing is expected to post first-quarter GDP figures on Friday. Economists polled by Reuters forecast GDP to grow 8.3 percent from a year earlier, extending China's worst run of quarterly sequential slowing since the 2008/09 crisis. This could delay any expected pick-up in earnings growth beyond the first quarter, with the upcoming quarterly corporate earnings season starting next week expected to extend weakness from last year.
In a sign of things to come, particularly for growth-sensitive sectors, China Shipping Development Co Ltd slumped 7.6 percent in Hong Kong and 1.2 percent. The shipper warned late on Tuesday that it expected to post a net loss for the first quarter on weak demand and an oversupply of shipping capacity leading to a fall in freight rates.