China shares see small bounce on industrial data, Hong Kong struggles

China shares rebounded modestly early Friday after data showed the pace of profit growth for Chinese industrial firms in August more than doubled from July, tempering Hong Kong weakness, with coal and aluminum counters leading gains.

Shares of most companies seen linked with the Shanghai free-trade zone and listed in the mainland extended losses ahead of its official launch on Sunday. Still, prices of some remain more than twice their late August levels.

At midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings was up 0.3 per cent, while the Shanghai Composite Index inched up 0.1 per cent. They are down 1.7 and 1.5 per cent on the week, respectively.

The Hang Seng Index inched up 0.1 per cent to 23,146.6 points, but the China Enterprises Index of the top Chinese listings in Hong Kong sank 0.7 per cent. Both appeared headed for their first weekly loss in four, down 1.5 and 2.8 per cent, respectively.

Trading volumes in both China and Hong Kong was lacklustre ahead of the quarter-end and holidays next week. Markets in the mainland will shut October 1 to 7 for the National Day holiday, Hong Kong will be closed on Tuesday.

“Nobody is taking big positions ahead of the long holiday in the mainland next week,” said Jackson Wong, vice-president for equity sales at Tanrich Securities.

Still, Aluminum Corporation of China (Chalco) surged by the maximum 10 per cent in Shanghai, spurring a bout of short covering that lifted its Hong Kong listing by 3.9 per cent.

Coal counters listed in the mainland climbed on hopes the launch of the coal derivative market will help stabilise coal prices, which have been falling. In Shanghai, Yanzhou Coal jumped 4.2 percent, while giant China Shenhua Energy inched up 0.4 per cent.

Profits earned by Chinese industrial firms rose 24.2 per cent in August from a year earlier to 483.2 billion yuan (HK$609.5 billion), compared with July’s 11.6 percent annual growth, the National Bureau of Statistics said on Friday.

The prospect of stabilising coal prices hurt Huaneng Power, whose shares fell 3.2 per cent in Hong Kong and 1.3 per cent in Shanghai.

Shanghai free-trade zone “concept” stocks were again weak as investors trimmed strong gains ahead of Sunday’s launch of the initiative. The shipping sector was further hurt by the first fall for freight rates in nine days.

Shares of Shanghai International Port dived 9 per cent and were down 18 per cent on Thursday and Friday combined, but remained more than double their August 22 trough.

Beijing Enterprises Water Group jumped 7.1 per cent after saying it would issue 400 million new shares to Malaysia government-backed Mount Reskin Investments at a 5.1 per cent discount to Thursday’s close, raising HK$1.2 billion (US$154.75 million).

China Huishan Dairy fell as much as 5.6 per cent in its first trading on the Hong Kong stock exchange, a disappointing debut after the company priced its initial public offering at the top of its marketed range.