Hong Kong stocks rallied for a second day yesterday as short-term traders sparked a last-minute buying spree following rumours that the mainland government may introduce fresh stimulus measures this weekend. The Hang Seng Index slid in early trading, but tacked on almost 200 points after the midday trading break to finish up 123.78 points or 0.94 per cent at 13,278.21. And with mainland-related stocks pacing the recovery, the H-share index jumped 129.28 points or 1.85 per cent to 7,131.98. 'Most investors expect some good news from the mainland this weekend,' said Patrick Shum, a strategist at Karl Thomson Securities. 'So we saw the market bounce back in the afternoon, and especially in the last 10 minutes, turnover was relatively huge.' Speculation mounted that the mainland government would announce some market-boosting measures this weekend. Observers said there were rumours the authorities might cut key interest rates, subsidise consumer spending and possibly disclose further details about the 4 trillion yuan (HK$4.53 trillion) stimulus package announced last year. 'These are really unsubstantiated rumours about how China may introduce more economic stimulus measures,' said Francis Lun Sheung-nim, a general manager at Fulbright Securities. 'But speculators took the rumours seriously, otherwise why would the market rally?' Mr Lun said the Hang Seng Index might slump to as low as 12,000 points in the near term as investors took profits before a deluge of dismal corporate earnings expected to flood the market from the middle of next month. Even after the two-day rally starting the Year of the Ox, the benchmark slid 7.71 per cent this month for its fifth decline in the past six months. Most markets around the region slumped yesterday as investors took profits from the global rally started earlier this week. Japan fell 3.12 per cent, South Korea edged down 0.38 per cent and the Philippines slid 1.91 per cent. The mainland markets were shut yesterday for a holiday and will resume trading on Monday. Meanwhile, China Resources Power Holdings was tipped to be the newest addition to the Hang Seng Index because of its substantial market capitalisation, according to a report from ICEA. China Resources Power, a mainland operator of coal-fired power plants, has the 28th-largest market value among main-board stocks, larger than 16 of the current 42 blue chips. 'It also has industry representation as mainland power plants are missing in the Hang Seng Index,' said Ernie Hon, an analyst at ICEA. ICEA added that China Merchants Bank and China Citic Bank Corp were unlikely to be added to the benchmark since there was already strong mainland financial representation on the index. The benchmark will have its quarterly review on February 13 and any changes to its membership will be effective after the market closes on March 6.