HONG KONG stocks surged to record highs last week with investors buoyed by the renewed rally in the United States. The prospect that interest rates will remain stable has helped boost Wall Street in recent weeks, and that has given investors confidence in equities. Hong Kong has also benefitted from a flow of funds away from lacklustre regional markets. The Hang Seng Index closed the week 291.65 points up at 12,510.05. The benchmark climbed 24.1 per cent this year. Average daily turnover for the week was strong at $7.6 billion, up from the previous week's $7.37 billion. Antony Mak, sales director at Vickers Ballas Securities (Hong Kong), said: 'The money continues to pour into Hong Kong. When the market is hot, it is very hot.' Brokers said a string of reports showing the US economy was not growing fast enough to warrant an interest rate rise any time soon was the major factor behind the strength of Wall Street. The Dow Jones Industrial Average broke through 6,000 for the first time on Monday and that gave Hong Kong the impetus to set new highs. The Hang Seng Index rose to its highest level ever during intra-day trade on Wednesday, reaching 12,602.34 and surpassing the 12,599 mark set at the peak of the previous bull market on January 4, 1994. However, that opened the floodgates for profit-taking and created fears that stocks may have headed into temporary consolidation. Kent Rossiter, senior institutional sales manager at Nikko Securities, said: 'You could almost see the players pushing the index up to the record level, but as soon as that happened there was no one willing to hold the bag.' This proved to be undue concern; despite closing 94.52 points down on the day, the strength on Wall Street and a renewed sense of optimism among the territory's investors helped the market make further gains on Thursday and Friday. Brokers said the recovery in the property sector and signs that consumer spending was picking up also aided the market advance. The poor performance of stocks in Thailand, Korea and the Philippines last week provided a further boost as investors switched their funds towards the territory. Among the 33 Hang Seng Index constituents over the week, 26 advanced, three closed unchanged, and four lost value. Banks were at the forefront of the charge, particularly HSBC, which set a number of record highs as it continued to advance. HSBC rose 5.08 per cent to $155 over the week, helped by the news investment bank Morgan Stanley had upped its target price for the bank to $173. Subsidiary Hang Seng Bank also made solid gains, rising 5.98 per cent to $93. Newspaper publishers found themselves in favour after having lagged the market earlier in the rally. Oriental Press Group climbed 8.64 per cent over the week, and South China Morning Post (Holdings) added 7.2 per cent. Property and infrastructure company Hopewell had a good week, rising 7.07, as investors bid up the stock following the disposal of most of its stake in Consolidated Electric Power Asia (Cepa) the week before. A broker at a British securities house said: 'People are getting more hopeful about Hopewell. After the sale of Cepa it is not in the tight debt position it was before.' Looking ahead, brokers say the market is likely to make further gains this week if there is no unexpectedly strong economic data from the US. Edward Chan, research director at Nava SC Securities, said: 'I don't think the market is running out of steam. It will continue to be driven by funds reallocating from other Asian markets.'