The Hang Seng Index crossed the 22,000-point level yesterday as market sentiment continued to strengthen amid an influx of hot money.
The index rose 107.5 points, or 0.49 per cent, to close at 22,030.39. With that, the index has risen 1.8 per cent in November, making it the third straight month of gains.
Brokers said monetary easing policies in the US and Europe in September had led to a steady inflow of hot money into Hong Kong. The Hong Kong Monetary Authority on Thursday had to sell HK$8.85 billion for US dollars to weaken the local currency as it again hit the HK$7.75 upper limit of the trading band.
Riding the tide, Hong Kong Exchanges and Clearing increased the size of its first share offering in 12 years to US$1 billion, from US$800 million it had initially planned on Thursday.
The exchange plans to sell 65.7 million new shares, representing 5.71 per cent of its enlarged issued capital, at HK$118 per share - a 5.4 per cent discount on its closing price on Thursday.
The net proceeds will finance its £1.39 billion (HK$17.26 billion) acquisition of the London Metal Exchange, which was cleared by Britain's Financial Services Authority on Thursday.
A Hong Kong government spokesman said it planned to spend HK$450 million to buy new HKEx shares to maintain its 5.88 per cent stake in the bourse.
HKEx shares closed 0.8 per cent lower at HK$123.80.
Chief executive Charles Li Xiaojia said: "We are very pleased with the strong response from investors for our share offering and the support they have shown for this major strategic step for HKEx."
Chong Hing Bank rose again, by 12.24 per cent, to HK$17.06 on rumours that the Liu family may be considering selling the bank. A person close to the family said there were no such plans.
But a trader at a leading local brokerage said since Wing Lung was sold at a 135 per cent premium, the family of Liu Lit-chi - who is stepping down as chief executive after more than 50 years at the bank - would consider selling if the price was as good.
Despite the strong market sentiment, mainland non-life insurer PICC Group still priced its initial public offering at HK$3.48, almost at the bottom of its indicative range of HK$3.43 to HK$4.03.
The retail tranche of the deal has been expanded to 7.5 per cent from the initially planned 5 per cent as it was more than 16 times oversubscribed. The institutional tranche accounts for 92.5 per cent of PICC's 6.9 billion shares on offer.
Despite a strong brand name and multiple distribution channels, fund managers and analysts are concerned about PICC's potential premium growth amid signs that the non-life business is showing signs of deteriorating. PICC shares will start trading on December 7.