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SCMP Reporter

The Hang Seng Index  closed above the 30,000-point level for the first time yesterday as continued high liquidity and the prospect of reduced interest rates  eased   uncertainties over the global credit crunch and weak US market sentiment.
The blue-chip index, which opened 360.71 points up on Thursday's 29,854.49 close, retreated to below 30,000  in the first hour before bouncing back to an intraday peak of 30,562.63. It ended up 550.73 points or 1.84 per cent at 30,405.22.
The demand for shares, notably property stocks and mainland financials, drove the value of the  market to a record HK$22.3 trillion, up from HK$21.94 trillion on Thursday.
The index gained 3 per cent  over the week, outperforming the Shanghai Composite Index, which slipped  3.9 per cent over the five days.
Market turnover stayed above HK$150 billion.  The property sector was the strongest  contributor to the Hang Seng Index  as  Sun Hung Kai Properties, Cheung Kong (Holdings) and Sino Land rose to fresh highs, with investors anticipating a US interest rate cut  next week.
The Hong Kong market had been 'overvalued for a long time and the strong performance is  unexpected', said Chan Yuk-keung, a fund manager at Philip Asset Management.
The market had been  boosted in part by  fund inflows from the mainland with the introduction of  the qualified domestic institutional investor programme, which helped to channel mainland savings into shares, analysts said.
The strong local economy,  international investors looking to tap into mainland-related assets and the increasingly  growing interest shown in the Hong Kong market by mainland investors are all driving up prices, according to a report by Frank Gong, the chief China economist with JPMorgan.
A hedge fund manager at an alternative asset management firm said: 'Despite the crazy market, mutual funds and index funds are  forced to join the hot market due to the monthly contributions from investors.'
He warned of substantial corrections in the near term as some fund managers would take profits, while the risk of the stock market bubble bursting was intensifying.
The Hang Seng Index has gained 47 per cent since August 16, when Beijing   announced plans, yet to be finalised, that would allow individual investors to buy Hong Kong-listed shares. The index now trades at  22 to 23 times forward earnings,  on par with levels seen during the stock crises of 1987 and 1997.



HSI ends above 30,000 on high liquidity and rate cut hopes