Hong Kong stocks yesterday extended Thursday's rally, rising to a fresh five-year high supported by index heavyweight HSBC as investors piled into blue chips at the expense of H shares. Fuelled by ample liquidity in the market, the Hang Seng Index shrugged off weak overseas markets to finish 43.52 points or 0.27 per cent ahead at 15,856.05. Wall Street fell 0.61 per cent on Thursday, leading to a weak Japanese stock market where the Nikkei-225 Index edged up just 5.81 points or 0.03 per cent to close at 16,101.91. In the past week, the Hang Seng Index has risen 2.45 per cent. However, turnover shrank significantly yesterday to $33.05 billion, compared with $42.35 billion on Thursday. Ricky Cheung, a fund manager at Phillip Asset Management, said the declining turnover showed investors had become more cautious ahead of the expiry of index futures on Monday and reflected waning enthusiasm for mainland stocks. 'But overall, market sentiment was still positive as Thursday's rally was supported by active turnover, which means the market is flush with funds,' he said. In addition, Mr Cheung said most futures traders had already rolled over their long positions, reflecting their optimism on the short-term market outlook. February index futures closed 27 points higher yesterday at 15,864, a 7.95-point premium on the underlying index. HSBC drove yesterday's index gain, rising 1 per cent to $131.80 on the back of strong turnover of $4.84 billion. It was the most actively traded stock of the day. Its turnover doubled that of another hot pick, China Construction Bank, a typical example of investor interest moving back to blue chips from H shares or red chips. The country's No3 lender fell 1.97 per cent to $3.725 with shares worth $2.2 billion changing hands. Sun Hung Kai Properties led the property counters, finishing 0.75 per cent firmer at $80.90. The leading developer joined the mortgage price war by selling its remaining flats at 18 Farm Road, a luxury residential project in To Kwa Wan, with a new mortgage package from Bank of East Asia that cut its housing loan rate to three percentage points below the prime rate. After reaching an eight-year high on Wednesday and having surged 23.8 per cent this year, the H-share index fell the second straight day, dragged down by huge profit-taking pressure. Pulled by overbought mainland financial and oil stocks, the index dipped 91.88 points or 1.37 per cent to end at 6,599.4. Still, the index has risen 3.43 per cent in the past week. Ping An Insurance retreated 3.94 per cent to $18.30, China Life Insurance softened 3.7 per cent to $9.10 and PICC Property and Casualty weakened 1.79 per cent to settle at $2.75. Bank of Communications, which has soared 41.84 per cent this year, fell 0.99 per cent to $5. Dao Heng Securities said in a daily note that increasing trading of Hang Seng Index constituents might signal that H shares were set to consolidate after sharp gains in the past two months. The securities house recommended that short-term investors take profit on leading H shares, especially banks and insurers.