April 27, 2016 / 4:56 AM / 2 years ago

China stocks flat after industrial profit data; Hong Kong mixed

* CSI300: flat; SSEC: flat; HSI -0.2 pct

* Investors have lukewarm response to stronger industrial profits

* IMF urges China to push ahead with corporate restructuring

SHANGHAI, April 27 (Reuters) - China stocks were flat on Wednesday morning, with investors hugging the sidelines despite stronger industrial profits on doubts over the sustainability of the recovery and concerns about a government crackdown in the commodities market.

Hong Kong shares were mixed, with market sentiment cautious ahead of U.S. and Japanese central bank policy decisions.

Both China’s blue-chip CSI300 index and the Shanghai Composite Index ended morning trading flat, at 3,180.12 points and 2,965.61 points, respectively.

In Hong Kong, the Hang Seng Index dropped 0.2 percent, but the Hong Kong China Enterprises Index gained 0.2 percent.

Investors had a lukewarm response to news that profits earned by Chinese industrial companies rose 11.1 percent in March from a year earlier, as the market has already priced in a tentative economic recovery in the first quarter.

The focus has now shifted to whether the debt-fuelled recovery is sustainable.

The International Monetary Fund said on Tuesday that China’s massive corporate debt problem could be eased through debt-to-equity conversions or securitisation of non-performing loans, but only if these apply to viable firms that undergo restructuring.

Reflecting investor caution, trading volume in Shanghai on Tuesday shrank to a four-month low and remained thin on Wednesday morning.

Meanwhile, outstanding margin loans - money investors borrow to buy stocks - have shrunk for five consecutive sessions.

Resource shares remained weak, as China imposed fresh curbs on commodities, triggering continued correction in materials such as iron ore and steel.

In Hong Kong, shares of GOME Electrical Appliances Holding Ltd slumped after the home appliance retailer issued profit-warnings.

Reporting by Samuel Shen and Pete Sweeney; Editing by Jacqueline Wong

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