Tencent, casinos pull Hong Kong up; China shares mixed by midday

SHANGHAI (Reuters) - Hong Kong shares extended gains from the previous day on increases in Tencent and casino shares as well as modest rises in mainland banking stocks, sending the Hang Seng Index to its highest intraday level since February.

Mainland shares had a mixed morning, as investors cashed in on the previous day's gains, after the banking sub-index closed up at its highest level since Dec 19.

By midday, the Hang Seng Index was up 1.0 per cent at 22,825.4 points, its highest level since Feb 28. The China Enterprises Index of the top Chinese listings in Hong Kong gained 0.4 per cent.

The CSI300 index of the largest Shanghai and Shenzhen A-share listings was down 0.1 per cent, while the Shanghai Composite Index was up 0.1 per cent at 2,100.89 points.

Hong Kong casino stocks began to climb back into positive territory, putting an end to a downward spin many had fallen into in recent days after peaking at the beginning of the month on positive gambling revenue data from Macao.

Wynn Macau, Galaxy Entertainment Group, and Sands China were all up 2.8 per cent by the lunch break.

Shares in Tencent, a dominating force on the Hang Seng, were also up in morning trade, gaining 2.5 per cent as the stock continued to see-saw on continuing investor concerns about the over-valuation of tech shares.

"Overall what we've seen is that Tencent has boosted the market sentiment, as well as other big cap stocks like the Chinese banking and insurance players," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong.

Yip said he expected gains in HK-listed mainland banking shares and property stocks would continue to lend support to Hong Kong shares throughout April.

On the mainland, banks were the biggest drag after investors cashed in gains from Tuesday's excitement over preferred shares that saw Industrial Bank Co, China Minsheng Banking Corp and Ping An bank Co jump more than four per cent.

Industrial Bank slid 1.1 per cent in morning trade, while Minsheng and Ping An shed 0.5 and 0.4 per cent, respectively.

Though not listed, Alibaba continued to have an impact on mainland markets, snapping up its second firm in as many days ahead of its initial public offering in the United States.

Shares in Shenzhen-listed Wasu Media Holding Co surged 10 per cent, the daily trading limit, after it said Alibaba founder Jack Ma and other partners had agreed to buy a 20 per cent stake in the firm for US$1.05 billion (S$1.32 billion).

On Tuesday, Ma announced he would take a 3.3 billion yuan (S$667 million) stake in the financial software firm Hundsun Technologies, sending the stock up 10 per cent on Tuesday, and another 10 per cent on Wednesday.