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Hong Kong shares suffer worst day in 3 months, China outshines Asia

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(Globalpost/GlobalPost)

* HSI -2.3 pct, H-shares -2.8 pct, CSI300 +0.9 pct

* Sinopec slides after new share sale, but holds above offer price

* HK property developers hit, new tightening measures feared

* China infrastructure drives A-share outperformance

By Clement Tan

HONG KONG, Feb 5 (Reuters) - Hong Kong shares posted their worst loss in three months on Tuesday, unmoved by onshore China's reversal of midday losses and weighed down by a 6.5 percent slide in China Petroleum and Chemical Corp (Sinopec) after a $3.1 billion new share placement.

The territory's property developers also were hit by comments from the chief of its defacto central bank that more measures could be introduced to cool the property market as elevated household debt is worsening risks from price gains.

The Hang Seng Index fell 2.3 percent to 23,148.5 points, its worst single-day loss since Nov. 8. It closed below its 10-day moving average for the first time since late November, suggesting more losses may be in store in the short term.

The China Enterprises Index of the top Chinese listings in Hong Kong slid 2.8 percent to its lowest closing level since Jan. 8.

In mainland markets, though, the CSI300 of the top Shanghai and Shenzhen listings posted a third-straight daily gain, rising 0.9 percent, rebounding from earlier losses. The Shanghai Composite Index stretched a winning streak into a seventh-day, ending up 0.2 percent.

"There's some liquidation of long positions (in Hong Kong) today, but people are not panicking," said Alex Wong, director of asset management at Ample Finance. He added that he would hold off buying on weakness, anticipating that further losses could create better buying opportunities.

Sinopec shares fell 6.4 percent in Hong Kong and 2.1 percent in Shanghai after the Chinese oil giant launched sold 2.85 billion new Hong Kong-traded shares at HK$8.45 each, a 9.5 percent discount to Monday's close.

They closed in Hong Kong at HK$8.74, the lowest since Dec. 31 but held above the offer price, pointing to robust demand for the new shares.

A source familiar with the matter said they were sold to a group of about 10 investors that included some of the world's largest institutional investors and global fund managers.

Hong Kong developer New World Development sank 4 percent in its worst loss since Oct. 29. Tuesday's losses trimmed its gains on the year to 15 percent after it surged 92 percent in 2012.

Comments from the Hong Kong Monetary Authority's chief late on Monday had spawned market chatter on Tuesday that new tightening measures on the city's property market may be announced later this week.

There was also broad profit taking in the financial sector after Wall Street's worst day since November and as worries re-emerged whether the eurozone's efforts to resolve its debt crisis will be disrupted by a political shakeup.

HSBC Holdings, Europe's largest bank, fell 2.7 percent, while Industrial and Commercial Bank of China slid 2.9 percent in Hong Kong and 1.3 percent in Shanghai.

POLICY CUES DRIVE A-SHARE GAINS

Strength in the property and infrastructure sectors helped the onshore Chinese market extend its winning streak and outshine its Asian peers, spurred by various policy cues in Chinese media.

China Railway Construction jumped 4.8 percent in Shanghai and 3.2 percent in Hong Kong after the official China Securities Journal reported that Beijing will likely introduce a development plan for 120 ports, which could drive investment in infrastructure such as transportation and energy pipelines.

Subway counters CSR Corp and CNR Corp each surged the maximum 10 percent in Shanghai, while China State Construction Engineering jumped 9.7 percent.

Chinese property counters were strong after a series of encouraging January contracted sales figures. China Vanke jumped 3.6 percent after it posted a 56 percent rise in January sales from a year earlier.

While investors are watching China's annual parliamentary meetings in March for clues on policy changes that the country's incoming batch of leaders favour, Credit Suisse China strategist Vincent Chan cautioned against expecting too much as the new leadership needs time to consolidate its power.

In a news conference in Hong Kong on Monday, Chan said it may not be until October this year, when the Politburo's Central Committee is expected to hold its third plenary session, that concrete measures for the major areas of reforms such as those involving state-owned enterprises will be released.

http://www.globalpost.com/dispatch/news/thomson-reuters/130205/hong-kong-shares-suffer-worst-day-3-months-china-outshines-asia