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HK stocks surge on mainland, US rallies

Hang Seng 213.93 points below historic high

Hong Kong stocks rose to a seven-week high yesterday, led by China Mobile, as investor confidence was bolstered by strong rallies in the United States and the mainland.

The Hang Seng Index leapt 416.56 points or 2.05 per cent to 20,757.53, its highest close since February 22.

Turnover was HK$64.38 billion, the 10th largest on record.

However, the index is still 213.93 points or 1.02 per cent below its historic high of 20,971.46 set on January 24 because of a slump last month.

China Mobile, the biggest stock in the blue-chip index, surged 5.69 per cent to HK$75.20, catching up with gains in other blue chips in the past few weeks.

HSBC Holdings, the second-largest blue chip, rose for an eighth consecutive trading day, by 1.56 per cent to HK$142.90.

China Mobile was also bolstered by a UBS research report, which quoted the company's chairman, Wang Jianzhou, as saying that profitability in the first quarter would rebound from the weak final quarter last year.

'Hong Kong stocks followed gains in overseas stocks on the rise of the US stocks last week,' said Castor Pang, a strategist at Sun Hung Kai Financial. 'Investors also snapped up heavyweight China Mobile, whose shares have recently underperformed in the market.'

The Dow Jones Industrial Average rose 0.47 per cent on Friday, driven by good corporate earnings, merger and acquisitions news and energy stocks amid higher crude oil prices.

The US market rally also propelled the region's markets, with Japan's Nikkei-225 rising 1.52 per cent and South Korea's Composite Index gaining 0.74 per cent.

'The 10-day winning streak, excluding the mild adjustment last Friday, in China's A shares also fuelled investors' sentiment in mainland-related stocks,' said Chan Yuk-keung, a fund manager at Philip Asset Management.

'International investors will now resume buying Chinese stocks, recovering their confidence despite a sharp correction in late February.'

The H-share index, which tracks 41 Hong Kong-listed shares in mainland firms, ended 1.55 per cent higher at 10,313.8 points - the highest close since January 4.

The market was boosted by strong earnings expectations for China Merchants Bank and China Life Insurance.

Merchants Bank, the sixth-largest mainland lender by assets, rose 4.72 per cent to HK$19.10, bringing this year's gain to 15.9 per cent.

China Life, the mainland's biggest life insurer, rose 1.58 per cent to HK$25.70. Investors are expecting strong profits after smaller rival Ping An Insurance (Group) reported last week that earnings almost doubled last year.

Gains in Merchants Bank and China Life also helped drive the Shanghai Composite Index up 2.22 per cent to a fresh record of 3,596.441 points.

The Shenzhen Composite Index rose 2.68 per cent to a new high of 973.876 points.

Mainland brokerage Shenyin Wanguo Securities said the Shanghai Composite Index would exceed the 3,800-point level in the near term, given the abundant liquidity in the market and increasing number of retail investors.

Funds placed by individual investors in local brokerages surged 140 million yuan last month while retail subscriptions to new mutual funds amounted to 61.1 billion yuan, Shenyin Wanguo said.

There were more than 200,000 new personal stock accounts for the Shanghai and Shenzhen markets each day between April 11 and 13, according to the China Securities Depository and Clearing Corp yesterday.

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