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The Hong Kong stock market roared to a record high yesterday as waning interest rate fears offered investors a new excuse to pursue Internet counters.

 The Hang Seng Index rose 473.52 points, or 2.73 per cent, to 17,758.76 on a turnover of $20.9 billion. Its previous high, reached on February 11, was 17,380.3.

 Even more action was seen outside of the index as counters such as Pacific Century CyberWorks, Legend and Tom.com recorded weighty gains.

 Sentiment was cheered by Wall Street's rally on Friday following benign employment figures in the United States.

 Expectations of positive economic growth figures in tomorrow's Budget speech and strong interest for two new Internet listings also stirred excitement.

 'Interest rate concerns eased a little after the jobless data,' OSK Securities research manager Alex Wong said.

 Investors concentrated on blue chips most closely identified with the Internet stock boom, leaving counters such as HSBC in the dust.

 China Telecom gained 3.94 per cent to at $79 as overseas funds continued to buy into the mainland's largest cellular telephone operator. Hutchison climbed 4.38 per cent to $131 and Cable & Wireless HKT gained 4.64 per cent to $24.80.

 A 6.62 per cent gain in CyberWorks to $23.35 also boosted HKT as their merger will be largely financed through a share swap.

 The Hang Seng Index is now trading on price-earnings ratios in the mid-20s range, well above its historical average.

 'You can't look at the previous index level anymore,' DBS Securities head of research Edward Ng said.

  'The new economy stocks will always trade higher and there could be some changing of the Hang Seng index to include even higher-valuation stocks like [CyberWorks] or Legend.'  Nomura International head of research Mark Simpson said investors should continue to focus on stocks in the telecommunications and technology arena, even as their valuations soared in relation to traditional-sector stocks.

 'Stick with the winners,' he said. 'Look how much Nasdaq is up this year - those people that rotated between the old economy and new economy stocks got crucified in the US.'  The biggest gainer among the blue chips was Henderson Investment, which soared 20.37 per cent to $6.50 after chairman Lee Shau-kee reiterated that the company would be the flagship for his group's technology projects (Stock Split, Page 12).

 SmarTone Telecommunications rose 2.86 per cent to $35.90 after last week's rally on the back of the higher valuation that rival cellular operator Sunday is expected to achieve through its initial public offering.

 'If the response to Sunday's IPO is good, SmarTone could go up some more as its valuation is less than Sunday's,' Mr Wong said.

 On the Growth Enterprise Market, shares in Tom.com soared 41.17 per cent to $12 - more than six times its IPO price of $1.78.

 Some brokers said Tom's bounce was due to the expected strong response to the upcoming spin-off and IPO of Sun Hung Kai Properties' technology arm Sunevision and as profit-taking by retail investors eased.

 'Last week, the selling orders from retail players was digested,' Tung Tai Securities research manager Kenny Tang Sing-hing.

 Analysts suspected the stock had been bought up during the past week's trading by a few institutions.

 'This stock is being cornered by major players,' Core Pacific-Yamaichi research director Alex Tang Yee-yuk said.

 Cathay Pacific jumped 8.37 per cent to $11.65 ahead of its results announcement tomorrow.



Telecoms sector back in spotlight as interest rates fears ease