* HSI +0.5 pct, H-shares +1.2 pct, CSI300 -0.1 pct

* H-shares at largest premium over A-shares in 3 years

* China brokers stretch weekly gains on expansion hopes

* China insurers buoyed by robust October premium data

By Clement Tan

HONG KONG, Nov 22 (Reuters) – Chinese shares listed in Hong
Kong again outperformed markets in the mainland and most of Asia
ex-Japan early on Friday, with strength in riskier issues poised
to help the H-share index close out its biggest weekly gain in
nearly two years.

Foreign investors rushed to cover bearish bets earlier this
week after China unveiled last weekend an ambitious set of
economic and social reforms, pledging to further free up markets
and help local governments find new sources of fiscal revenue.

At midday, the Hang Seng Index was up 0.5 percent at
23,703.3 points and up 2.9 percent for the week, but just shy of
the year’s intra-day highs at 23,944.7. The China Enterprises
Index of the top Chinese listings in Hong Kong climbed
1.2 percent.

Gains for the H-share index were again limited by technical
resistance at March highs, but it is now up 7.2 percent this
week, its biggest since early December 2011 and a drastic
outperformance over its onshore peers.

The Shanghai Composite Index was down 0.2 percent by
midday and the CSI300 of the leading Shanghai and
Shenzhen A-share listings off 0.1 percent. But the indexes are
set for their best weekly showing in two months, up 3.1 and 2.5
percent, respectively.

That has left the Hang Seng China A-H Premium Index
at its lowest since October 2010, suggesting H-shares
are now trading at its biggest premium over A-shares in more
than three years.

“The two markets are quite different at the moment,
primarily because of their different liquidity conditions,” said
Hong Hao, chief equity strategist at Bank of Communications
International.

Hong was referring to the tighter conditions in the
mainland, where markets remained largely closed, as cash rates
have risen this week despite the central bank’s largest cash
injection in nearly two months. On the other hand, global funds
are now reallocating money to offshore Chinese markets.

“But trading wise, I don’t think investors should take on
any more risk after the big rally earlier this week,” he added.

On Friday, Chinese brokerages stretched weekly gains,
boosted by a report in the official China Securities Journal
that foreign investors may be allowed to increase stakes. Draft
plans submitted for approval on the expansion of the sector aims
to “grow the industry by 10 times in the next 10 years,” the
same report said.

Citic Securities , the country’s largest
listed brokerage, jumped 2.9 percent in Hong Kong and 2.1
percent in Shanghai. This week, Citic shares have surged 19
percent in Hong Kong and 12 percent in Shanghai.

Chinese insurers were buoyed by a report in the official
Shanghai Securities News that regulatory data showed insurance
premiums jumped 11.6 percent in the first 10 months this year
from a year ago. CPIC jumped 4.1 percent in Hong Kong.

Chinese coal producers in Hong Kong were also lifted by a
report in the official China Securities Journal that China
Shenhua Group, the country’s largest coal producer, said it will
raise steam coal prices for a ninth-straight week.

Yanzhou Coal spiked 3.4 percent, China Coal
rose 1.4 percent, while China Shenhua Energy
climbed 2.3 percent.

Other Chinese energy giants were also buoyed by published
comments from a senior policy researcher that China will turn
most of its state-owned enterprises (SOEs) into companies with
diversified shareholders by 2020.

Andrew Swan, Blackrock’s head of Asian equities, told the
Reuters Investment Summit late on Thursday he has increased bets
to Chinese energy and industrial stocks, while trimming
positions in the outperforming Internet and casino sectors.

“You need to be very careful as an investor right now: not
to pay too much on “new” China and playing too little of “old”
China,” Swan said. He added that he has not been invested in the
Chinese property sector in the last 12 months and will not be
looking to do so, given policy headwinds.

China Vanke, the country’s largest developer by
sales, slid 0.9 percent in Shenzhen on the day and is now down
1.8 percent this week and languishing at its lowest in nearly a
year.

The State Council approved the establishment of a unified
property registration system late on Wednesday, setting the
stage for a nationwide expansion of a property tax trial.