* CSI300 +1.2 pct; SSEC: +1.9 pct; HSI: +1.3 pct
* SOEs, including Sinopec and PetrChina surge on merger hopes
By Samuel Shen and Kazunori Takada
SHANGHAI, April 27 (Reuters) - Stocks in China and Hong Kong rose to fresh seven-year highs on Monday morning, led by heavyweight Chinese state-owned enterprises (SOEs) on expectations that Beijing will accelerate mergers in the underperforming sector.
Investors brushed aside concerns over the accelerated pace of initial public offerings (IPOs) and data showing weak earnings for industrial firms.
“We don’t see a slowdown in money inflows, so more liquidity will likely push stock indexes higher,” wrote Sun Jianbo, strategist of Galaxy Securities Co.
“Stepped-up IPO approvals won’t change the market’s upward trend.”
The CSI300 index rose 1.2 percent to 4752.026 points at the end of the morning session, while the Shanghai Composite Index gained 1.9 percent at 4475.686 points.
The Hang Seng index was up 1.3 percent, at 28426.72 points, while the Hong Kong China Enterprises Index rose 0.9 percent to 14619.91 points.
Chinese SOEs listed in both markets were up sharply after state media reported the central government will drastically slash the number of conglomerates it controls through mergers and acquisitions.
Oil giants China Petroleum & Chemical Corp (Sinopec) and PetroChina Co Ltd jumped by their 10 percent limit in Shanghai on merger expectations. In Hong Kong, Sinopec rose 5.8 percent while PetroChina jumped 4.9 percent.
Consolidation expectations also pushed shares of China Shipbuilding, CSSC Holdings Ltd and Guangzhou Shipyard International Co Ltd all up over 5 percent.
Shares continued to rise despite further evidence that the corporate earnings’ outlook was deteriorating as the economy slows.
Profits earned by Chinese industrial firms fell 0.4 percent in March from a year earlier to 508.61 billion yuan ($82 billion), and were down 2.7 percent in the Jan-March quarter, the National Bureau of Statistics said on Monday.
The CSI300 Real Estate Index rose, amid signs that authorities were exhorting banks to do more to support the cooling property market, one of the key risks to the economy.
Loans to Chinese property developers surged again in the first quarter despite the country’s housing downturn, official data showed on Friday. (Editing by Kim Coghill)