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SCMP Reporter

Shares of HSBC Holdings rose above HK$70 yesterday for the first time since December last year, as the stock market continued to be lifted by massive cash inflows.  
HSBC closed at HK$70.80, up 3.36 per cent. The stock last closed above HK$70 on December 10, when it ended at HK$70.141, after adjusting for the rights issue, according to the stock exchange.
Other banking stocks also gained, with BOC Hong Kong (Holdings) jumping as much as 9.4 per cent before closing at HK$13.24, up 7.29 per cent. Industrial and Commercial Bank of China  rose 4.71 per cent to HK$5.11.
Analysts attributed the sharp rise in bank stocks to liquidity flowing into the market, boosting the Hang Seng Index to its highest in a little more than eight months.
'There is some hot money from the mainland looking for short-term gains,' said Louis Tse Ming-kwong, a director at VC Brokerage, adding that HSBC could reach HK$80 if its American depositary receipts performed well in the US market.
'It is too early to say whether the US economy has bottomed out,' Mr Tse said.
However, he added, the rise in the shares was partly due to short covering.
Mr Tse said there was some short selling of HSBC last week, and the recent rise of the stock could trigger short covering. Meanwhile, some investment funds were also  replenishing their portfolios.
He said another reason supporting the stock was that HSBC had reiterated that it would refocus its business on the mainland and emerging markets, which were improving.
Kenny Tang Sing-hing, the head of research at Redford Securities, said he expected HSBC to reach HK$80 this year. 'The provision for its US consumer finance unit could be less than expected,' he said, adding that recent economic data indicated  the US economy was shrinking more slowly.
Goldman Sachs, which upgraded the bank last month, said at the time  there were signs the problems at HSBC Finance, the bank's US consumer finance unit, were stabilising and would decline as the business was wound down.
Mr Tang said the stock was relatively inexpensive, with a dividend yield of more than 5 per cent.
However, Ivan Li, an analyst at Kim Eng Securities, said the surge in HSBC was mainly due to the massive cash flows  into the market.
'The bank still faces a rising trend of non-performing loans,' Mr Li  said.
He also said the  jump in  BOCHK  shares was a result of the strong market sentiment.
'It does not seem that its business improved substantially,' he said.
However, Mr Tse said BOCHK, as one of the major home-loan lenders, had gained from the recent rebound  in the property market.
He said the bank would also benefit from its key role in the city's yuan business, which could boost the stock.



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HSBC

HSBC back above HK$70 as cash inflows boost banking plays