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SCMP Reporter

China Mobile upgrades add to bullish mood

The Hang Seng Index once again came tantalisingly close to breaking the 23,000 level  yesterday on the back of gains in China Mobile shares but a wave of profit taking kept the counter at bay after it set a new intraday high.

Hong Kong's blue-chip index gained 202 points or 0.89 per cent to close at 22,809.02.

The H-share index gained 33.86 or  0.26 per cent to end the day at 13,037.11 after setting a new intraday high of 13,251.37.

Turnover was heavy at HK$91.41 billion  but below Wednesday's  HK$100.9  billion when the Hang Seng Index fell 1.22 per cent.

Hopes for a breach of the psychological level of 23,000 were high during the morning session when the index hit  22,975.81, the seventh record  in the past eight sessions.

However, investors came back to take profit in the afternoon, putting particular pressure on mainland financial shares.

'The momentum is still there and the high level of liquidity is playing a big role here. I still think we'll break that 23,000 level in the coming days, although everyone is very cautious at these levels,' said Steven Leung, the director of institutional sales at  UOB Kay Hian.

China Mobile was the market leader, ending the day up  3.67 per cent at  HK$89.05   after Citigroup raised its rating on the world's largest telecommunications operator to 'buy' from 'hold' and also increased  its price target to HK$115 from HK$73.

JP Morgan raised its share price target to HK$97 from HK$83 while also raising earnings forecasts.

'We expect [the company] to dominate the high-growth China telecoms market for the next two to three years, irrespective of pending industry restructuring,' said Citigroup in a  research note.

Shares in the company, a key  component of the blue-chip index, have risen  HK$18,  or 25 per cent, since May 30.

'So these gains are pretty concentrated and about ready for a correction,' said a trader at a foreign brokerage.

Some mainland banks sank into the red under pressure from fears of an interest-rate  rise on the mainland.

Fresh data showing a ballooning foreign exchange reserve and increased liquidity on the mainland are fuelling expectations that Beijing will again take steps to  rein in the economy.

The escalating sub-prime mortgage crash in the US also undermined interest in financials.

'Financial shares in general are pretty vulnerable at the moment given what's happening in the US sub-prime mortgage market,' said a trader.

Industrial and Commercial Bank of China shares ended the day down  2.46 per cent at HK$4.75.  Bank of China lost  2.32 per cent to  HK$4.21 per share while China Construction Bank was down  0.86 per cent at HK$5.80.

Ping An Insurance shares also benefited from bullish analyst views, gaining  4.16 per cent to  HK$61.30  per share after Citi raised its price targets for the company.



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Profit takers deny HSI 23,000 mark

Hang Seng Index