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Raymond Ma

Shares in China Everbright rose 5.56 per cent yesterday on hopes consolidation in Hong Kong's banking industry will soon pick up pace.

The mainland finance company's stock rose 12.5 cents to close at $2.375. Trading was heavy with 18.2 million shares changing hands.

China Everbright has said it was considering selling its 20 per cent stake in International Bank of Asia (IBA).

'When the market catches news of banking mergers, other small and medium-sized banks usually also benefit,' said Tung Tai securities associate director Kenny Tang Sing-hing.

China Everbright and  Bahrain-based Arab Banking Corp, which owns 55 per cent of IBA,  said in December that they hoped to sell the small bank.

IBA shares finished flat yesterday at $2.925.

Shares of Liu Chong Hing Bank gained for a second day, climbing 65 cents or 7.69 per cent to $9.10.

The rise came despite denials that the bank's substantial shareholders are considering selling their stakes or a bid to privatise Liu Chong Hing is in the offing.

The bank said it was unaware of any reasons for recent increases in its stock. Shares in the bank have climbed 23 per cent since Friday.

The bank said there were 'no negotiations or agreements relating to intended acquisitions'.

However, analysts remained unconvinced by denials by both parent company Liu Chong Hing Investment and Cosco Pacific, which owns about 10 per cent of the small bank.

'The possibility of Cosco Pacific selling  its stake in Liu Chong Hing Bank is higher than that of the bank's parent,' Mr Tang said. He noted  Cosco Pacific and other red chips had been streamlining and disposing of non-core businesses.

Phillips Securities research director Louis Wong Wai-kit said: 'Looking at the share turnover, I think some investors smell something happening.'

Shares in Liu Chong Hing Investment, which owns 45 per cent of the bank, remained steady at $4.20 yesterday.



Consolidation hopes boost bank plays