China shares set for 4th straight weekly gain, Hong Kong mixed

Mainland Chinese shares extended gains on the week on Friday, while Hong Kong hovered at 17-month highs, with investors rotating into Chinese non-financial counters after official news reports raised hopes of quicker sector reforms in the new year.

But gains came in weak volumes in both markets with benchmark indexes moving in recent ranges, suggesting the rally powered by China growth-related plays in December is running out of steam as the year winds to a close.

The Hang Seng Index went into the midday trading break up 0.1 percent at 22,630.4, hovering at its highest since Aug 1, 2011. It was up 0.6 percent on the week and 22.8 percent for 2012.

The China Enterprises Index of the top Chinese listings in Hong Kong slipped 0.1 percent as investors took profit on the outperforming railway sector, but is up 0.9 percent on the week and 14.1 percent on the year.

The CSI300 of the top Shanghai and Shenzhen listings rose 0.4 percent, while the Shanghai Composite Index edged up 0.3 percent. They were set for their fourth-straight weekly gains, being up 3.5 and 2.8 percent respectively this week.

The Shanghai Composite Index joined the CSI300 in positive territory on the year earlier this week. The Shanghai index is now up 0.3 percent in 2012, while the CSI300 is up 4.7 percent.

"It might be better for people to leave the good quality names with strong thematic stories for a while in January and start screening for cyclical names that have lagged the rally in December," said Hong Hao, chief equity strategist at Bank of Communications International Securities.

On Thursday, Chinese non-banking financial counters were broadly stronger after China's central bank pledged to quicken the pace of reforming and opening up the sector in 2013, while preventing systemic risks.

Citic Securities jumped 5.4 percent to a record high in Hong Kong since its October 2011 debut and is now up 42.9 percent in 2012. In Shanghai, Citic climbed 1.1 percent and is now up 27 percent for the year.

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