INVESTORS bought stock actively last week on the hope that the mainland would soon gain entry into the World Trade Organisation (WTO).
Buying boosted the Hang Seng Index by 7.6 per cent from the last trading day before the long holiday. The blue-chip benchmark finished at 11,914.10, its highest level since March 1998.
H shares jumped even more, with the H-share index gaining 12.1 per cent, to 403.92. The red-chip index was up 6.1 per cent, to 861.37.
But investors did not seem to be very discerning about which stocks would benefit whenever the mainland joins the global trading body and which would suffer in the face of greater competition from abroad.
For example, the Hong Kong-listed shares of two mainland-based airlines rocketed on Friday - China Southern Airlines was up 24 per cent, and China Eastern Airlines gained 17 per cent - on news of a Sino-US civil-aviation agreement doubling the number of flights between the two countries.
The agreement also would allow a fourth US airline to enter the mainland market and expand the number of US cities with flight connections to the mainland.
Many observers thought this agreement would benefit the better-run and more-competitive US airlines more than the mainland ones, which still need to reform and consolidate. But that did not stand in the way of the astonishing one-day surge in the two mainland airlines.
