Strong demand for China plays pushes H shares to new highs Hong Kong's stocks shattered the 20,000-point barrier for the first time yesterday, a day before trading ends for the year. The H-share index also hit a record high as investors rushed to put their cash in Hong Kong-listed mainland stocks, particularly in the financial and telecoms sectors. The Hang Seng Index closed up 276.18 points, or 1.4 per cent, at 20,001.91, off an all-time high of 20,038.23 hit late in the session. Turnover was heavy at HK$54.29 billion, 61.5 per cent more the average daily volume of HK$33.6 billion. The blue-chip index has risen 34 per cent this year. More than a half of the gain has been due to the strong performance of China Mobile, the world's largest mobile-phone operator in terms of subscribers. China Mobile also led yesterday's rally in the benchmark index, surging 2.95 per cent to HK$67.95 and adding 113.82 points to the index. Several other blue chips also hit record highs. Shares of BOC Hong Kong, the Hong Kong-listed arm of the Bank of China, had the sharpest gain among the blue chips, soaring 8.36 per cent to a high of HK$21. Hong Kong Exchanges and Clearing jumped 3.55 per cent to a new high of HK$84.50 and Esprit Holdings climbed 3.31 per cent to a record HK$85.95. Hong Kong-listed mainland stocks rose 1.02 per cent, or 104.97 points, to a record 10,363.28. The advance was led by oil, telecoms and some banking stocks. Mainland investment bank BOC International said it still favoured China plays and believed the H-share index would reach 11,000 by the end of next year. Brokerage firm ICEA said China fever was expected to extend into next year amid the country's strong economic performance, especially when much of the global economy was under pressure to slow down. But some observers were more circumspect. 'Chinese financial stocks have been foamed,' said Alex Wong, an asset manager at fund company Shenyin Wanguo. 'It is irrational that [shares of] China Life are trading above 70 times its earnings, while the market values of China Construction Bank and the Industrial and Commercial Bank of China are larger than global banking giant HSBC Holdings.' Mr Wong said it was hard to predict when the mainland stocks would peak and the China-concept bubble burst. He noted that substantial foreign capital was still rushing in to snap up mainland stocks. But Harris Fraser (International) investment research associate director Andy Lam expected mainland stocks to encounter a major correction in January before setting record highs throughout 2007. Mr Lam saw no signs of a bubble and expected foreign investors would carefully and selectively choose mainland stocks as the bull run continued. The mainland's main stock index also rose yesterday, ending up 1.23 per cent at 2,567.594.