The Chinese technology giant Lenovo saw its share price climb to a new 13-year high a day after the company was added as a constituent stock of the benchmark Hang Seng Index.
Lenovo's shares rose 5.22 per cent to finish at HK$8.87 yesterday, its highest close since reaching HK$8.93 on August 1, 2000.
The previous 13-year high, HK$8.53, came on Tuesday last week, the day before the company reported its earnings for its financial third quarter, ended December 31.
The company, the world's second-largest supplier of personal computers, will be included in the index from March 4. It is replacing the loss-making Aluminum Corp of China, a state-owned enterprise, to complete the select roster of 50 blue-chip companies on the Hong Kong stock exchange that make up the Hang Seng Index.
Lenovo's inclusion will help increase the weighting of the information technology sector in the index after Tencent, China's biggest internet company, was added in September 2008.
Lenovo's chairman and chief executive, Yang Yuanqing said: "The market has clearly demonstrated confidence in Lenovo's ability to meet its commitments, maintain steady growth in a tough environment and execute a strategy that not only delivers strong short-term results but also lays a solid foundation for our long-term performance."
Gaining "blue-chip" status in Hong Kong is significant because it will help broaden the number of shareholders who may consider owning the stock.
Lenovo said this could include funds whose investments must mirror the Hang Seng Index or pension funds whose investment committees look for index inclusion status as a criterion for buying a company's shares.
Lenovo, which was founded in Beijing and operates in more than 160 countries, reported what it claimed as its best quarter ever last week.
The company's net profit for the third quarter grew 34 per cent year on year to a record US$204.9 million.
Revenue for the quarter rose 12 per cent to a record US$9.4 billion, up from US$8.4 billion for the same period in the previous year.
Alberto Moel, a senior analyst at Bernstein Research, said lingering turmoil at rival Hewlett-Packard and Dell's plan to go private would benefit Lenovo in the near term.Topics: Lenovo