Corrected: Hong Kong shares edge higher as dairy producers climb

Goodbaby International Holdings

05/08/2013 07:46

(Correcting name in the 10th paragraph to Prince Frog International) * HSI +0.2 pct, H-shares +0.2 pct, CSI300 +0.3 pct * Biostime leads dairy sector gains after Fonterra China ban * China shippers get policy lift * HSBC at 3-mth high ahead of H1 earnings By Clement Tan HONG KONG, Aug 5 (Reuters) - Hong Kong and China shares edged higher in weak trade on Monday, as baby product producers jumped on hopes of higher demand after the official Xinhua news agency reported China may allow more couples to have two children. Most dairy producers also rose after China banned New Zealand milk power imports following a contamination scare at New Zealand's Fonterra  FSF.NZ , a development that sank Want Want China  0151.HK , seen reliant on New Zealand imports. ID:nL4N0G50HU      "Retail interest in baby products on China potentially relaxing its one-child policy has not quite picked up yet, but there are some funds that have been positioning for any eventual change," said Jackson Wong, Tanrich Securities' vice-president for equity sales.  At midday, the Hang Seng Index  .HSI  was up 0.2 percent at 22,227 points, hovering at a two-month high. The China Enterprises Index  .HSCE  of the top Chinese listings in Hong Kong also edged up 0.2 percent. The CSI300  .CSI300  of the leading Shanghai and Shenzhen A-share listings rose 0.3 percent, while the Shanghai Composite Index  .SSEC  edged up 0.2 percent. Midday Shanghai volume was at its weakest in nearly a month. China Modern Dairy  1117.HK  shares spiked 7.6 percent, while Biostime  1112.HK , which imports the bulk of its dairy products from Europe, surged 8.6 percent on hopes that demand for them will rise following the ban on Fonterra's New Zealand products. But Want Want China  0151.HK , which sources the majority of its raw milk from Fonterra, fell 3.2 percent. In a note to clients, Barclays analysts wrote that Want Want's management said its procurement from Fonterra should not be adversely impacted as it imports raw milk and not whey protein products, the subject of the contamination scare.     A Xinhua report that China could let couples have a second-child if one parent is a single child also supported the Chinese dairy sector and spawned gains for baby product makers. Currently, to get permission, both parents must themselves be single childs. The 21st Century Business Herald Newspaper reported last Friday this possible development as likely to take place later this year or early next year, with an unconditional two-child policy policy possible after 2015. In Hong Kong, baby-product makers Goodbaby International 1086.HK  surged 8.5 percent to its highest in more than six weeks while Prince Frog International  1259.HK  climbed 4.1 percent. China Rongsheng  1101.HK  climbed 3.1 percent in Hong Kong while Guangzhou Shipping  600685.SS  surged 7.8 percent in Shanghai after Xinhua reported that China's cabinet issued a three-year plan to upgrade and restructure the shipbuilding industry through 2015. The report said the plan focuses on seven tasks, including accelerating innovation, controlling new capacity, focusing on high-end products and promoting civil-military integration.   EARNINGS LOOM FOR HSBC HSBC Holdings  0005.HK  HSBA.L  shares rose 0.7 percent to a three-month high ahead of interim earnings later in the day. Up 10 percent on the year, HSBC is now trading at 10.7 times forward 12-month earnings, an 18 percent discount to its historic median, according to Thomson Reuters StarMine. HSBC's half-year profit is set to rise 15 percent to more than $14 billion as a three-year cost cutting plan starts to pay off and lower bad debts compensate for a fall in revenue at Europe's biggest bank.  ID:nL6N0G337T  China Foods  0506.HK  tumbled 5 percent after it issued a second profit warning in two months of a net loss at its coming interim earnings announcement.  ID:nL4N0G506W  Interim corporate results will dominate the China and Hong Kong markets over the next few weeks, though a slew of China's July economic data will be in focus, starting with trade and possibly, money supply and loan growth data on Thursday. (Editing by Richard Borsuk) ((clement.tan@thomsonreuters.com)(+852 2843-6392)(Reuters Messaging: clement.tan.thomsonreuters.com@reuters.net)) Keywords: MARKETS HONGKONG CHINA STOCKS/