Stocks broke a two-day losing streak yesterday as investors snapped up financials on the back of good results from the Bank of East Asia (BEA). The Hang Seng Index rose 244.89 points, or 1.4 per cent, to 17,620.23 with turnover remaining thick at HK$15.31 billion. 'There's some funds flowing into Hong Kong buying the banking sector,' said Josephine Hui Suet-ming, a director of Celestial Securities. HSBC was up 2.94 per cent to $105, while subsidiary Hang Seng Bank jumped 4.9 per cent to $85.50. BEA reported a 38.9 per cent jump in first-half earnings but ironically it was the only one of the four banks in the Hang Seng Index to decline. It was off 2.01 per cent at $19.45 as investors sold on the results news. BNP Prime Peregrine executive director of sales Jason Ho said: 'BEA at this level looks quite interesting. We are telling clients to roll into recommended banks.' Also on BNP's buy list were Wing Hang Bank and Wing Lung Bank which were trading lower than their peers at twice the book price but producing returns on equity in the mid to high teens. BEA's results failed to excite Anthony Lok, head of regional banking research at Nomura International. He pointed to a fall in the bank's loan portfolio and a 17 per cent rise in expenses as reasons for caution on the sector. 'I'm starting to suspect that valuations aren't cheap,' Mr Lok said. His favourite was Liu Chong Hing Bank, which was trading at only half book value, while non-performing loans were below the industry norm and the capital adequacy ratio was an impressive 20 per cent. The BEA results were only the aperitif for HSBC on Monday, with the market expecting a 20 per cent increase in the bottom line, Ms Hui said. H shares were down 0.36 per cent and red chips lost 0.87 per cent as profit-takers won out in the market's hottest sectors. Mr Ho said: 'We are seeing a fair bit of day trading that's why H shares were weaker towards the close.' He still sees value in selected toll-road, steel and petrochemical counters. Among red chips, Citic Pacific, China Resources Enterprises, China Everbright Holdings and Cosco got the nod. 'They are still trading at a discount to the Hang Seng Index and they have good managements,' Mr Ho said. QPL International rose 1.79 per cent to $8.50 but Pacific Challenge Securities yesterday recommended that investors head for the exits. In a detailed breakdown of the chip firm's interim results released on Monday, the brokerage valued the shares of QPL at just $7. After the Nasdaq listing of its ASAT chip-packaging unit, QPL would trade more as a holding company, Pacific Challenge said. 'Following the ASAT selldown, the only remaining operating business is the manufacture of integrated circuit leadframes - a low-margin business with limited growth potential as it is being superseded by newer, more efficient technologies,' the report said.