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Chinese markets down ahead of long break

Thursday, February 07 09:23:34

Shanghai shares saw an eight-day winning streak end today, pulling down Hong Kong, as financial and property stocks slid after China's central bank signalled it would shift its focus back to tackling inflation from supporting growth.

The official China Securities Journal reported that first-tier cities may slow issuance of pre-sale permit in the first half of 2013, which added to jitters after the People's Bank of China flagged containing speculative housing demand as a focus.

The Hang Seng Index ended down 0.4 percent to 23,177 points, keeping above Tuesday's one-month closing low at 23,148.5. The China Enterprises Index of the top Chinese listings in Hong Kong shed 1.4 percent.

In the mainland, the Shanghai Composite Index fell 0.7 percent following its eight-day winning streak during which it rose 6.2 percent. The CSI300 of the top Shanghai and Shenzhen A-share listings shed 0.6 percent from Wednesday's 17-month closing high.

Shanghai's losses came in the third-lowest volume in 2013, while Hong Kong turnover stayed lackluster although it sneaked above its 20-day moving average for only the third day in almost two weeks.

"There's some rotation trade going on now, especially among those who got in early in the rally," said Hong Hao, the Hong Kong-based chief strategist at Bank of Communication International Securities.

In a turnaround from its previous focus of supporting economic growth, the Chinese central bank said in its fourth-quarter monetary policy report that the country needs to pay special attention to consumer prices.

Hong said he believes "it's too early to start worrying about inflation in the first quarter. If anything, the central bank's statement shows demand is returning, although some form of property cooling policy can be expected if prices keep rising."

Chinese banks were among the top drags on benchmark indexes in both onshore and offshore markets. China Minsheng Bank tumbled 5.2 percent in Hong Kong and 6 percent in Shanghai. ( C) Reuters