* SSEC 0.3 pct, CSI300 0.5 pct, HSI 0.0 pct
* China-listed companies post 5.5 pct drop in combined earnings
* Vanke surge rekindle interest in property shares
SHANGHAI, Aug 31 (Reuters) - China stocks were firm on Wednesday as the earnings season drew to a close, with interim results wrong-footing pessimists and showing signs that state-backed “National Team” investors had been buying blue-chip shares, especially financials, in an apparent effort to stabilise the market.
Hong Kong stocks hovered near 10-month highs, amid signs that Chinese money inflows into the city hit the highest level in two months on Tuesday and preparations for the Shenzhen-Hong Kong Stock Connect went into high gear.
China’s blue-chip CSI300 index rose 0.5 percent to 3,329.86 points by the lunch break, while the Shanghai Composite Index gained 0.3 percent to 3,083.58 points.
China’s nearly 3,000 listed firms have all published their interim results, posting a 5.5 percent drop in their combined net profit, according to official China Securities Journal.
But to the relief of many investors, three-fifths of the companies registered earnings growth, while bloated sectors such as steel and coal showed tentative signs of recovery.
“Everyone is saying the economy is lousy, but if you look at listed companies results, they’re not as bad as some had expected,” said David Dai, Shanghai-based investor-director at Nanhai Fund Management Co.
“With bond yields so low, and returns from wealth management products meaningless, it makes sense to allocate some assets to the stock market, which has limited room to fall further.”
Investors also drew confidence from company disclosures that a group of state-backed investors, who were summoned to rescue the market during last summer’s crash, were active in the first half.
They increased holdings in a range of big-caps including PetroChina, Bank of Communications, Agricultural Bank of China and CRRC Corp .
The financial sector in both China and Hong Kong posted solid gains on Wednesday, as investors shrugged off warnings by four of China’s so-called ‘Big Five’ state-owned banks that profits will continue to be pressured in the second half of the year.
“Concerns over big lenders’ asset quality may trigger bank runs in western countries, but in China this will never happen,” said Nanhai Fund’s Dai, noting that valuations of Chinese banking stocks were very attractive.
The property sector jumped 5.6 percent, as bellwether Vanke surged 10 percent in Shanghai on news that Nexus Capital has raised its stake in Vanke’s Hong Kong-listed shares to 11.54 percent from 10.82 percent.
In Hong Kong, the Hang Seng index was unchanged at 23,020.93 points, while the Hong Kong China Enterprises Index lost 0.3 percent, to 9,570.15.
Reporting by Samuel Shen and John Ruwitch; Editing by Eric Meijer