* CSI300 +0.3 pct; SSEC -0.1 pct; HSI: -0.9 pct
* Banking shares continued to fall on weak earnings
* Small-caps surge on expectations of Shenzhen-Hong Kong Connect
By Samuel Shen and Kazunori Takada
SHANGHAI, April 30 (Reuters) - China stocks were mixed on Thursday morning, with weak banks countering sharp gains in small-cap plays ahead of a planned cross-border investment scheme between Shenzhen and Hong Kong.
Banking shares sagged for the second day, after China’s biggest lenders posted their slowest first-quarter profit growth in at least six years as a cooling domestic economy squeezed lending margins and led to a jump in soured loans.
But the Shenzhen market, home to China’s listed start-up companies and small- and medium-sized enterprises was very strong, on expectation that China will soon launch the Shenzhen-Hong Kong Stock Connect programme.
UBS expects China will likely announce the timetable for the scheme in May, and kick off the project in the second half of the year. Hong Kong’s stock exchange said on Thursday the scheme still awaits regulatory approval.
The CSI300 index rose 0.3 percent, to 4,787.36 points at the end of the morning session, bringing this month’s gain to 18.2 percent. But the Shanghai Composite Index lost 0.1 percent, to 4,472.36 points, on track to post a monthly gain of 19.3 percent.
Both indexes are set to gain for the third month in a row.
Wei Fengchun, chief strategist of Bosera Asset Management Co expected Beijing to further loosen monetary policies this year, so the logic of the liquidity-driven rally has not changed.
Reflecting sustained investor confidence in a market that has surged 80 percent since November, Chinese fund managers will raise the proportion of their portfolios invested in stocks over the next three months, a Reuters poll shows.
China’s transportation stocks gained, led by airline operators, after China Eastern Airlines Corp Ltd announced bullish first-quarter earnings.
Strong first-quarter performances also bolstered prices in Chinese insurers, including New China Insurance and China Ping An.
In Hong Kong, main indexes were also weighed down by financial stocks.
The Hang Seng index dropped 0.9 percent, to 28,136.29 points, while the Hong Kong China Enterprises Index lost 1.4 percent, to 14,395.41.
The Hang Seng is set to gain more than 14 percent in April, the biggest monthly gain in nearly six years.
HSCE is on track to rise 16.6 percent, the biggest monthly gain since October 2011. (Editing by Jacqueline Wong)