Blue-chip index surges past 16,000 threshold
Share prices surged yesterday, with the Hang Seng Index breaching the 16,000-point level for the first time in more than five years.
Brokers said strong gains by market heavyweight China Mobile as well as property and financial stocks were prompted by a rally on the Japanese stock market.
The Hang Seng Index rose 258.71 points or 1.63 per cent to 16,063.75, up from a low of 15,877.44 and slightly off a high of 16,067.74 for the best finish since February 22, 2001.
The H-share index rose 123.07 points or 1.83 per cent to 6,826.85.
Turnover was $31.71 billion compared with $33.42 billion on Friday.
ABN Amro chief Asian strategist Eddie Wong said the upside was limited, despite the index surging through the key resistance level.
He added there was not much downside either because the defensive nature of Hong Kong stocks would attract investors during a market consolidation in the region.
'We believe the Hong Kong equities market will remain stagnant for the time being, lacking a catalyst to break out one way or the other, while a major rally among the property counters is necessary for a sustainable growth in the index,' Mr Wong said.
Yesterday's gain was led by China Mobile and HSBC, which together added 119.6 points, or 46.22 per cent of the index gain.
The mobile operator rebounded 3.19 per cent to $42.05 from Friday's market sell-off in the counter on a rumoured share placement. The bank edged up 0.85 per cent to $131, which traders said reflected its strong fundamentals.
Property stocks also rallied with Hang Lung Properties leading the blue-chip gainers with a 5.08 per cent surge to $15.50.
Arjuna Mahendran, the chief economist and strategist at Credit Suisse Asia-Pacific's private banking business, predicted a stable near-term outlook, ruling out strong demand as the Easter holidays drew near.
'The Hang Seng Index will consolidate slightly above 16,000 for a few days to test the strength of the market before resuming its upward trend towards our target of 16,700 for the end of the year,' he said.
He said the market would out-perform with other Asian equity markets this year, aided by investment in China before the 2008 Olympics in Beijing and the start of infrastructure projects under the 11th Five-Year Plan.
The blue-chip index tested the critical 16,000 mark three times last month but retreated after reaching 15,999.31, 15,936.18 and 15,922.75.
Louie Shum Chun-ying, a dealing director at Sincere Securities, said the next resistance level would be 16,200, but the index might have already peaked for the short term.
Francis Kwok, a director at Peace Town International, said the index would test 16,300.
Alex Lee, the head of retail distribution at Allianz Dresdner Asset Management, said the company's Hong Kong fund was underweight on property developers and energy stocks while overweight on financial stocks and diversified on telecommunication plays.
Mainland stocks were strong amid the favourable regional sentiment. Zijin Mining continued to lead the market, gaining 9.83 per cent to $6.70, and Dongfeng Motor rose 7.35 per cent to $3.65.
PetroChina, the most profitable listed company, rose 3.08 per cent to a high of $8.35.
Mr Lee said China stocks remained attractive although the index had already traded above 13 times its price-earnings ratio. The fund house is selective in picking resources stocks, favouring upstream oil plays and projecting oil prices between US$50 and US$70.
Hong Kong Exchanges and Clearing data shows the market turnover last month at $696.9 billion and the first-quarter total at $1,932.9 billion - historical highs.