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Joseph Lo

Turnover rises to $20b as deluge of hot money from overseas boosts banking and property stocks

Hong Kong stocks rose to a six-week high yesterday as renewed speculation over a revaluation of the yuan attracted heavy inflows of foreign capital.

Blue-chip property and banking stocks were the biggest beneficiaries of the rally.

The Hang Seng Index rose 109.35 points, or 0.8 per cent, to break through its 100-day moving average and end the day at 13,859.58.

Turnover jumped nearly 65 per cent to $20.14 billion.

'I really think this rally can be sustained,' Phillip Securities research director Louis Wong Wai-kit said. 'Hot money continues to flow into the market in hopes of speculative gains when the yuan is revalued.'

The  index opened up 18.5 points over its 13,750.23 close in the previous session, but fell slightly to 13,719.81 in the first  30 minutes of trading.

The index then rocketed to an intraday high of 13,919.52 just  before the lunch break.

The afternoon session was relatively quiet, with investors willing to sit on the day's gains, brokers said.

Market heavyweight HSBC rose 50 cents, or 0.4 per cent, to $125, after brokerage Credit Suisse First Boston (CSFB) raised its 12-month target price to $150 from $145.

CSFB said it expected HSBC to outperform the market given the 'unique' potential of its investments in the mainland, including a 19.9 per cent stake in the Bank of Communications (Bocom) acquired last year for US$1.74 billion.

'It's a bullish sign that we were able to break through the 100-day moving average and then to maintain the gains through the rest of the afternoon,' Mr Wong said.

'I expect to see some resistance  around the 14,000-point level, but there should also be strong support for the market around 13,600,' he said.

All 33  HSI constituent stocks rose yesterday, with banking and property counters posting the biggest gains   as concerns about  interest-rate rises eased.

'The rally was quite broad-based, which is another positive factor,' Mr Wong said.

Hang Seng Bank shares  rose $1.50, or 1.44 per cent, to $106, while Bank of East Asia gained 15 cents, or 0.66 per cent, to close at $22.85.

Bank of China (HK)   advanced 1.03 per cent to $14.75.

Monday's announcement of an unexpected  rise in the number of residential mortgages approved by banks last month to a two-year  high shored up property stocks.

'The residential mortgage numbers have really helped  ease fears that the property market was running out of steam,' Mr Wong said.

Sun Hung Kai Properties  climbed $1.50, or 2.05 per cent, to $74.50,  while Sino Land   surged 2.84 per cent to $7.25.

Cheung Kong rose 1.04 per cent to $73 a day after it announced plans to launch a $500 million equity-linked note to retail investors.

Henderson Land Development  surged 2.27 per cent, or 80 cents,  to $36.

Rexcapital Asset Management director Alex Wong Kwok-ying said the market had been oversold in recent weeks, although he was less hopeful of a continued rally.

'Traders are using the yuan as an excuse to enter the market, but the market's probably a bit overbought now,' he said. 'It's interesting that H shares didn't do that well [yesterday].'

The Hang Seng China Enterprises Index rose a modest 62.74 points to 4,762.7 from its previous close of 4,699.96.

PICC Property and Casualty, China's largest non-life insurer, recovered  slightly from its 7.96 per cent tumble on Monday, gaining 1.22 per cent to $2.075.

Energy stocks also fared better yesterday despite a drop in global crude prices. PetroChina surged 2.09 per cent to $4.875,  Zhenhai Refinery rose 1.76 per cent to $8.65 and Shanghai Petrochemical  climbed 1.69 per cent to $3.

Sinopec rose 0.8 per cent to $3.15, while CNOOC gained 0.58 per cent to $4.325.

Yanzhou Coal, the only mainland coal stock listed abroad, posted its biggest one-day gain in seven months, rocketing 7 per cent to $10.70. The company yesterday announced record earnings of 1.93 billion yuan and a special bonus share dividend.



Yuan revaluation hopes lift HSI to six-week high