Hong Kong shares rose 1.14 per cent yesterday on hopes of progress in the restructuring of troubled Guangdong Enterprises (Holdings) (GDE). The Hang Seng Index gained 104.89 points to end at 9,244.49, with the three red-chip constituents leading the way. The H-share index bolted up 4.54 per cent to 307.12 points, while the red-chip index surged 4.7 per cent to 690.58 points. Brokers said the visit of Bank of China president Wang Xuebing gave rise to expectations that mainland bankers were assisting in solutions to mainland corporate debt problems. Mr Wang was quoted in newspapers yesterday as saying Hong Kong would remain a major fund-raising centre for mainland companies. Brokers said the market was also cheered by the resignation of three directors from Guangnan, a GDE unit seeking a standstill agreement with creditors. They said the resignations pointed to progress in the GDE case, which had unsettled bankers and investors. Rumours that GDE employees would be recalled to the mainland and be replaced by locals also helped sentiment, brokers said. 'The [Bank of China] chief's comments in his visit to Hong Kong indicated debt restructurings were on track . . . and there seems to be some progress at Guangdong Enterprises,' Daiwa Securities vice-president of Asian equities Michael Liang said. Celestial Asia Securities research analyst William Li Kin-tung said: 'People were buying red chips and H shares on the news of management changes at Guangnan, but I think the market is oversensitive about the case. 'A change of management does not mean their liabilities will disappear.' GDE associate Guangdong Investment rose 12 per cent to $1.12, Shanghai Industrial added 7.14 per cent to $12 and China Resources Enterprise climbed 6.25 per cent to $9.35. The three companies are Hang Seng Index constituents as well as members of the red-chip index. The property index also outperformed, rising 2.16 per cent to 12,075.06 points. Some analysts attributed the index's gain to rumours that banks would cut interest rates at the end of the week. 'They cut at the [calendar] new year, so the rumour was that they would give a 'bonus' cut at the Lunar New Year,' a broker said. Worldsec International banking analyst Patrick Ho Wai-wa, however, said a cut was unlikely to come in the next month or two. 'You need to see development in the [mainland] debt situation and look at non-performing loans in Hong Kong before making such a move,' he said.