Hong Kong share prices closed at a new record high yesterday as strong interest in Chinese stocks led the market to its largest single-day turnover, dealers said.
They said expectations of some positive policy announcements by Chinese authorities ahead of the 10th anniversary of Hong Kong's handover to China on July 1 and optimism over A-share listing plans of China Construction Bank (CCB,
Sentiment was also supported by Wall Street's advance on Friday and gains on regional bourses yesterday after tame US core consumer inflation figures.
The Hang Seng Index closed up 565.84 points, or 2.69 percent, at 21,582.89 -- off a low of 21,256.29 and an all-time high of 21,585.03.
The index's previous closing high was 21,017.05, hit last Friday, while its previous all-time intraday high was 21,088.86, reached on May 15.
Turnover reached a record HK$100.07 billion (US$12.8 billion).
Kenny Tang, associate director at Tung Tai Securities (
"The market expects increased funds to pour into H shares through increased QDII [qualified domestic institutional investor] quota and other economic incentives for Hong Kong ahead of the July 1 handover," he said.
China's QDII program allows Chinese institutions to invest overseas.
The Hang Seng China Enterprises Index was up 422.8 points or 3.7 percent at 11,886.71, off a high of 11,944.30.
Castor Pang, investment manager at Sun Hung Kai Financial Securities (
"Fund managers are leveraging against the wide differential between prices of H shares and their [mainland] counterparts," he said.
"The practice has been to sell A shares at the peak and buy H shares while valuations are attractive and pocket the difference," he said.
Pang added that the A-share listing plans of CCB and China Mobile provided "a good excuse" to accumulate Hong Kong-listed shares of those firms.
Tang said that window-dressing activities ahead of mid-year reporting by fund managers also helped push leading stocks higher.
China Construction Bank was up HK$0.34 at HK$5.25, leading shares of mainland companies higher after Citigroup Inc said Chinese lenders' interim results will be "surprising on the upside."
The stock extended Friday's gains after announcing plans to issue up to 9 billion A shares for a listing in Shanghai.
China Mobile rose HK$4.55 to HK$80.35 on a report that it plans an A share listing as early as next month to raise 80 billion yuan (US$10.48 billion).
China Telecom (中國電信), the largest fixed-line phone operator on the mainland, rose HK$0.15, or 3.3 percent, to HK$4.66. It led gains among telecom stocks after saying it would buy three of its parent's units for 1.41 billion yuan to reduce costs and expand overseas.
Chinese stocks also closed sharply higher yesterday, adding 2.92 percent as investors returned to the charge in the absence of any announcement of fresh government measures to cool the economy over the weekend.
The benchmark Shanghai Composite Index closed up 120.48 points or 2.9 percent at 4,253.35 on heavy turnover of 182.22 billion yuan.
Additional reporting by Bloomberg
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