* HSI +0.3 pct, H-shares +0.8 pct, CSI300 -0.1 pct

* PBOC officials reform comments hurt smaller Chinese
lenders

* Re-rating of Chinese equities unlikely in near term:
BAML’s Cui

* Hong Kong property buoyed by dovish Bernanke comments

By Clement Tan

HONG KONG, Nov 20 (Reuters) – A key index of Chinese shares
listed in Hong Kong crept into positive territory on the year
early on Wednesday, helped by strength in China’s largest banks
and insurers after supportive comments on financial reform plans
from senior central bankers.

Chinese mid-sized lenders broadly underperformed on fears
deposits will come under pressure after a vice-governor at the
People’s Bank of China said that Beijing will lift controls on
deposit rates when conditions are ripe.

By midday, the China Enterprises Index of the top
Chinese listings in Hong Kong was up 0.8 percent to turn
positive for the year for the first time since early March, now
up 0.2 percent. Gains on the day were, however, again capped by
chart resistance at March highs.

If gains hold, this will be its fifth-straight daily gain,
but the fourth in five days for the Hang Seng Index,
which rose 0.3 percent on the day to 23,736.9 points. It is now
just shy of the year’s intra-day high at 23,944.7 and up 4.8
percent in 2013.

The Shanghai Composite Index and the CSI300
of the top Shanghai and Shenzhen A-share listings
ended a choppy morning session down 0.1 percent. They are still
down 3.4 and 4.5 percent on the year, respectively.

H-shares are now trading at its biggest premium over
A-shares since January 2011.

“The H-share rally in the last few days was a little more
than I’d expected, but it’s likely due to a combination of ample
global liquidity and investors being underinvested in Chinese
equities before that,” said David Cui, Bank of America Merrill
Lynch’s chief China equity strategist.

He added that a re-rating of Chinese equities is unlikely in
the near term, expecting China’s financial system to remain
unstable in the next year or two as authorities clean up the
effects of the stimulus rolled out in the aftermath of the
2008-09 financial crisis.

Cui was the top-ranked China equity strategist in
Institutional Investor’s annual research rankings for a
third-straight year in 2013, the publication said late on
Tuesday.

On Wednesday, China Life Insurance rose 1.7
percent to its highest since mid-February in Hong Kong.

It has now jumped more than 20 percent from a Nov. 13
trough, prodding its relative strength index (RSI) to its
highest in more than 10 months, suggesting it is now at its most
technically overbought since then.

China Construction Bank (CCB) spiked 1.3 percent,
while shares of smaller rivals China Minsheng Bank and
China Merchants Bank slipped 0.6 and 0.2 percent in
Hong Kong, respectively.

Merchants Bank, Minsheng Bank and
Industrial Bank were among the top drags on the
CSI300 index, each sliding just under 1 percent. There were also
broad losses for most of the financial sector.

Comments from Chinese central bank chief Zhou Xiaochuan seen
on Tuesday also touched on quickening the process of full yuan
convertibility, while the country’s securities regulator
tempered expectations of a resumption of new listing approvals.

“There’s some profit taking going on right now and others
are rotating into counters that have lagged the rally earlier
this week,” said Jackson Wong, Tanrich Securities’
vice-president for equity sales.

Hong Kong markets were further buoyed by dovish comments
from outgoing U.S. Federal Reserve Chairman Ben Bernanke that
further eased fears that the central bank may soon reduce its
asset purchasing scheme, triggering some short covering in
rates-sensitive counters, traders said.

Hong Kong property developers New World Development
rose 1.3 percent, while Link Real Estate Investment
Trust (REIT) climbed 2.1 percent.