Investors start the new year as they left off, buying China stocks heavily and sending the index to a six-year high The New Year opened with continued investor confidence in China-related shares as strong buying across the board propelled the H-share index 6.83 per cent higher to a six-year record. The H-share index finished at 5,363.06, its highest close since September 25, 1997, with all the 32 index constituents ending higher and 18 stocks up more than 4 per cent on the day. Analysts said the gains were largely liquidity-driven, with institutional investors returning from the one-day holiday ready to further boost their exposure to China's economy. At the same time, people already in the market are unwilling to sell and are looking for more upside ahead of companies' full-year results in March, which are expected to reveal strong earnings growth. According to dealers, there is strong interest in China-related stocks from European and US investors following the series of spectacular debuts by mainland companies listing in Hong Kong and New York over the past month. For several of them, share prices have almost doubled already, with PICC Property & Casualty up 94 per cent, Fujian Zijin Gold Mining 89 per cent and China Life 82 per cent. Expectations that global oil and energy prices will remain high also underpinned the market yesterday through hefty gains in H-share oil giants PetroChina and Sinopec, which both closed at record highs, and in blue chip offshore oil and gas producer CNOOC. 'China is still the top growth story as far as global investors are concerned and we don't think that will change this year,' said Geoff Lewis, head of investment services at JF Asset Management. 'You have to be aware of the possibility of a substantial correction because markets don't go up in a straight line. But for the time being there are not that many solid growth stories around.' Investor enthusiasm appears undiminished even though the H-share index jumped 152 per cent last year and some of the current liquidity is likely to be mopped up by a slew of new initial public offerings expected early in the year. 'A large number of new issues are expected from China. If deals announced so far materialise, they could amount to US$10 billion in new supply and could limit market upside in 2004,' warned JP Morgan Hong Kong strategist Steven Li in a recent report. Yesterday's strong momentum was evidenced by the $19.34 billion worth of shares that changed hands. H shares accounted for 21 per cent of the total, compared with 29 per cent for the benchmark Hang Seng Index stocks. Trading was again the most active in China Life Insurance, which rose another 3.15 per cent as fund managers continued to accumulate the stock before it goes into the MSCI China index on Tuesday. The company also had the added appeal of being the only mainland life insurer listed in Hong Kong, said Joe Choy, director of marketing and sales at Quam Securities. 'Life insurance in China is a very green business with a lot of potential to grow,' he said. The Hang Seng Index added 1.79 per cent to a 2?-year high of 12,801.48, led by HSBC (Holdings), which rose 1.22 per cent to a record $124. Property stocks also attracted buyers on hopes that property sales will follow the economic recovery, while telecommunications stocks were also back in favour. Banks are normally strong at this time of year as investors snap up shares ahead of February earnings reports to get their hands on the usually substantial dividends. Buying of HSBC was given added impetus on news it has won approval to issue credit cards on the mainland with Bank of Shanghai.