China shares got a lift from property developers while the Hong Kong market slipped as insurers fell and the continuing gridlock in the US debt talks weighed on turnover. The lack of progress on nailing a way to raise the US debt ceiling and address the ballooning budget deficit has kept cashed-up funds from making big bets even with valuations for Chinese shares near multi-year lows.
The Hang Seng index finished down 0.1, unchanged from midday, and held above its 50-day moving average. On the mainland, the Shanghai Composite closed up 0.8 percent as real estate counters gained after China affirmed it will carry out ambitious plans to provide low-cost housing.
With a season for corporate earnings around the corner, some market players believe any resolution on the US debt crisis could bring buyers back to Chinese equities which have underperformed Asia this year and last. But China's GDP will continue to grow around 9 percent while inflation pressures are likely to ease going into the second-half, said Evans, who is overweight on China, which he expects to outperform the rest of Asia over the next two or three quarters. Hong Kong blue chips such as Hutchison Whampoa, up 0.1 percent on Wednesday and nearly 7 percent over the past week, have seen steady buying, a sign that some investors believe there will be an earnings-driven recovery in the markets.
Insurers were the biggest drags on the market on Wednesday after a large stake sale from private equity firm Carlyle Group and a report from Standard & Poor's that said growth for the sector could slow marginally kept shares under pressure.
China Pacific Insurance, in which Carlyle sold a stake worth up to $1 billion, fell 4.5 percent. Larger rivals China Life and Ping An fell around 1 percent each. Shares got a boost from Chinese authorities reiterating their support for the country's plans to build 35 million "social housing" units over the next five years. China's vice minister for housing, Qi Ji, expects the pace of building affordable housing to increase in the next two or three months and some 10 million units could be built by the end of November, the China Securities News reported.
Those announcements lifted the property sub-index, which tumbled 4.1 percent on Monday after the weekend's deadly railway accident. On Wednesday, it gained 0.6 percent, helping the Shanghai Composite to close above the 2,700 mark. "Investor confidence was hurt by recent incidents," said Cheng Yi, an analyst at Xiangcai Securities in Shanghai, referring to the train crash and the US debt crisis.