Hong Kong stocks made impressive gains yesterday as investors took heart from increasing corporate activity. Talk of spin-offs boosted the market as did optimism following a spate of successful initial public offerings, including Shanghai Industrial. The rebound in United States stocks and expectation that interest rates are not likely to rise in the near future also buoyed sentiment. The Hang Seng Index closed 107.66 points or 0.96 per cent up at 11,264.73, its highest since March 6. Turnover was moderate at $4.67 billion, up from the revised $4.58 billion for Thursday. Stephen Doe, regional research analyst at HG Asia, said: 'More and more people are coming around to the idea of sustained growth and low inflation. 'There is a general confidence that the Hong Kong market is undervalued and will go higher over the next 18 months.' Stocks like Cheung Kong, Wai Kee, and Shell Electric made the best gains as talk of possible spin-offs generated excitement. Cheung Kong rose $1 to $57.25 as more investors bought the stock in expectation it would follow New World Development and spin off its China properties soon. Civil engineering group Wai Kee rose 15.47 per cent to $2.425 as investors looked forward to its planned spin-off of Road King Infrastructure. Shell Electric rose 7.5 cents to $5.05 amid turnover of $170.36 million amid speculation the company was planning its own China spin-off. There also was talk about a spin-off by Chinese Estates. The rebound on Wall Street over the past week has helped sentiment as has the passive state of long bond yields. The Dow Jones added 19.58 points on Thursday. Brokers said much extra money was from abroad. Edwin Cheung, dealing director at Taiwan Securities, said: 'The first of the fund flow was from Japan, now it is from Europe and the US.' Among the 33 Hang Seng Index constituents, 29 advanced, one closed unchanged, and three lost value. Properties made the best gains as investors bet lower interest rates would boost the territory property market. The Hang Seng Property sub-index rose 1.29 per cent to 21,345.71. Howard Gorges, director at South China Brokerage, said: 'If the market is looking bullish it tends to be led by properties and hongs.' Allied Properties and Allied Group both closed unchanged as investors waited to see whether regulators would allow the former to buy a stake in Sun Hung Kai & Co without having to make a general offer. Leather-jacket maker China Elegance International continued to surge, rising 17.5 cents to $2.75, 166 per cent over its $1.03 issue price after six days of trading. Brokers see the market making further gains next week but say it will face resistance at the previous 11,600 high. Mr Cheung said: 'The futures are looking very strong and maintained at a large premium. Next week could see a 200-point gain.'