SHANGHAI (Reuters) - China shares posted modest gains on Thursday as regulators reassured investors that reforms to company listings would not open a floodgate of new offerings.
The Hong Kong market was little changed, underscoring investors' caution ahead of the Federal Reserve's policy meeting next week, which is expected to produce the first U.S. interest rate hike in nearly a decade.
China's blue-chip CSI300 index was up 0.5 percent at 3,653.69 points by the lunch break, while the Shanghai Composite Index edged up 0.2 percent to 3,479.05.
China's cabinet announced late on Wednesday that the country would shift to a registration system for initial public offerings (IPOs) within two years.
The current IPO approval mechanism is seen by many as the root of capital misallocation and corruption. The changes will allow the market, instead of regulators, to decide which firms get to list and how many shares they can sell.
But the plan has also fuelled fears that a large number of companies could rush to the stock market for fundraising simultaneously, freezing large up amounts of funds in the financial system which could in turn force up interest rates.
In an apparent move to ease investors' concerns, China's securities regulator said that the reform will be a "gradual" process, and the IPO floodgate would not be opened all of a sudden.
"It looks like IPOs would still be under some sort of control, so the registration system doesn't seem as frightening as previously thought," said Shen Weizheng, fund manager at Shanghai-based Ivy Capital.
Brokerages including Haitong Securities, CITIC Securities and Guosen Securities all posted solid gains, as investors bet the new IPO system would boost their underwriting revenues.
The real estate sector had another strong day, with expectations building that cash-rich insurers would continue to build positions in modestly-valued property majors, after a disclosure by China Vanke Co that two insurance companies had been buying its shares.
Vanke jumped 4.3 percent in morning trade to an eight-year high, bringing gains so far this month to 30 percent.
In Hong Kong, the benchmark Hang Seng index was flat at 21,789.67 points, while the Hang Seng China Enterprises index dipped 0.2 percent.
The indexes were weighed by continued weakness in energy and resource shares as global commodity prices fall.
(Samuel Shen and Pete Sweeney)
