HK shares could edge lower, Chinese banks in focus

Hong Kong shares could edge lower at Monday's open, with turnover likely to stay low though U.S. Federal Reserve chairman Ben Bernanke's comments on Friday could boost cyclicals, limiting losses.

Bernanke on Friday stopped short of detailing further action to boost the U.S. recovery but said the central bank would consider what more it could do to fight high unemployment, giving some comfort to investors.

But more volatility is expected this week with several earnings announcements from major Chinese companies and fresh U.S. jobs data on Friday.

The Hang Seng Index closed down 0.9 percent at 19,582.9 points on Friday, but snapped a four-week losing streak, ending the week up 0.9 percent as earnings-driven gains provided some respite.

Chinese banks, particularly small to mid-sized ones, could come under focus after Reuters reported on Friday that China has ordered banks to include their margin deposits in required reserves at the central bank to mop up excessive liquidity.

In a note on Monday, Barclays analysts estimated the new requirement could reduce system liquidity by around 900 billion yuan ($140.9 billion). They said small banks that rely more margin deposits for deposit growth would be more negatively impacted.

These banks could include China Citic Bank Corp Ltd , China Minsheng Banking Corp , Bank of Communications Co Ltd and China Merchants Bank Co Ltd , the note said.

Bank of America is completing plans to sell over half of its shares in China Construction Bank , with a group of Asian and Middle Eastern sovereign wealth funds negotiating to buy, the New York Times reported on Saturday.

Elsewhere in Asia, Japan's benchmark Nikkei was trading down 0.2 percent at 8,779.1 points, while the Korea Composite Stock Price Index (KOSPI) was trading up 1.0 percent at 1,796.2 points at 0100 GMT.

HOT STOCKS

* China Petroleum & Chemical Corp (Sinopec) , Asia's top oil refiner, said it planned to raise no more than 50 billion yuan ($7.8 billion) through the issuance of bonds to fund projects and pay debt.

* Sinopec reported a 12 percent rise in first-half net profit, beating analysts' forecasts, on higher refined petroleum product prices and increased sales volume.

* Sino-Forest , a Chinese forestry company accused of fraud and the parent of Greenheart Group , said on Sunday Allen Chan had resigned as chairman and CEO and that it placed three senior employees on administrative leave, due to information uncovered in an ongoing internal review. Greenheart Group shares were suspended Monday pending the release of price-sensitive information, it said in an exchange filing.

* Top Chinese automaker SAIC Motor Corp reported a 46.1 percent gain in its first-half earnings thanks to brisk sales of Buick and Passat models made at its Shanghai ventures.

* Aluminum Corp of China Ltd , the country's top aluminium maker, missed forecasts with a 22 percent fall in first-half net profit, hit by higher interest costs.

* China COSCO Holdings Co Ltd's president said on Friday the company has resolved lease disputes with shipowners on 18 vessels, and at least two Greece-based shipowners said they hope to reach a settlement soon.

* China Shenhua Energy Co Ltd , the country's largest coal producer, posted a 16.5 percent increase in first-half profit, buoyed by rising sales volume on the back of rising energy demand in the world's second-largest economy.

* Russia's United Company RUSAL Plc , the world's top aluminium producer, on Monday reported a sharper than expected 70 percent drop in net profit in the second quarter on non-cash items and as cost inflation offset higher prices and output.

MARKET SUMMARY * Wall St's 1st weekly gain in more than a mth * Bonds up as Bernanke keeps stimulus door open * Dlr tumbles after Bernanke;US jobs data ahead * Oil rises as Irene targets U.S. east Coast ($1 = 6.387 Chinese Yuan)