Hong Kong shares edged lower on Wednesday, but a mid-morning surge by mainland markets lent some support to Chinese companies listed in the territory, helping the Hang Seng Index finish off its intraday low.
The Shanghai Composite Index was up 2.2% at 2,501.1 by midday, with A-share turnover almost equalling total turnover in each of the previous three sessions.
"It's possible some funds, bigger investors, have gone into the market to pick up bigger names, boosting the market," said a senior analyst at a mainland brokerage who declined to be named.
Gains in beaten down, large-cap energy and financial counters helped the market outperform Asian peers. PetroChina Co was the leading boost, up 1.6% after hitting an all-time intraday low on Tuesday.
PetroChina's Shanghai listing is down almost 13 percent on the year to date and is trading at 10.4 times forward 12-month earnings, an all-time low, according to Thomson Reuters Starmine.
China Shenhua Energy Co, the mainland's biggest coal producer, jumped more than 4%, while Industrial and Commercial Bank of China, the biggest lender in the world's second-largest economy gained 1.5%.
China Pacific Insurance (Group) Co, with a market capitalisaion of about $28.3 bln, gained 3.7% in volume almost equalling its 30-day average.
CHINA PROPERTY, ESPRIT WEIGH ON HSI
The Hang Seng Index was down 0.26% at 18,964.83 at the midday trading break, lifted by strength in Chinese companies. The China Enterprises Index of top Hong Kong-listed mainland companies drew back from early losses to end the morning flat.
The Hang Seng Index fell more than 1% during the morning, underperforming the region, with Europe-focused retailer Esprit Holdings extending its recent slide, down 7.8%, to the lowest since January 2002.
It has plunged almost 77% from its closing price last Wednesday since posting a worse-than-expected 98% decline in net profit for the year ended June.
Chinese property issues were among the biggest losers on the Hang Seng Index, with China Overseas Land & Investment down 2.3%. Non-component Evergrande Real Estate Group was down 3%.
Official data on Monday showed a marginal easing of China's housing inflation in August as home prices in major cities remained flat for a second straight month.
"We believe developers will begin to cut property prices to boost sales," CCB International analysts said in a note on Tuesday. "The process may take time and developers with weak financials may suffer more acutely as they are compelled to make deep price cuts lest they lose market share."
