Commodities play fuels HK stock rally

Hong Kong stocks rose yesterday for a third straight day as a commodities rally fuelled resource plays, and refiner Sinopec Corp leapt on talk it may receive government subsidies as oil prices test records.

Investors also bid up rate-sensitive Hong Kong property developers after US Federal Reserve Chairman Ben Bernanke signaled a readiness to cut interest rates again to stem further damage to the faltering US economy.

After opening lower, the market built on Wednesday's rally and gathered strength, then eased as the benchmark Hang Seng Index approached 25000 points.

Investors remain wary whether shares could break out of range. "We have yet to see if the current uptrend can be sustained," said Mona Chung, fund manager at Daiwa Asset Management.

"I don't think all the bad news have been reflected. We'll be range-trading until we get clarity from the US and the mainland."

The benchmark Hang Seng Index ended up 0.4 percent at 24591.69. The China Enterprises Index of Hong Kong-listed mainland companies, or H shares, finished up 0.7 percent at 14039.98.

Mainboard turnover was HK$82.4 billion compared to Wednesday's HK$99.4 billion.

Sinopec, the biggest boost to the H shares, jumped 3 percent to HK$9.02.

Zinc producer Hunan Nonferrous Metals Corp Ltd rose 3.8 percent to HK$3.84 after zinc shot up overnight.

Aluminum Corp of China, the country's top alumina producer, leapt 1.8 percent to HK$16.08 amid strained supplies.

Shares in Hong Kong property developers also outperformed, after US Fed Chairman Ben Bernanke told US lawmakers the central bank would act in a timely manner to support growth. Hong Kong's rate cycle tends to track the US's since its currency is pegged to the US dollar.

"The prospect of lower interest rates is good for developers," said Pauline Dan, who helps manage $2.5 billion at Manulife Asset Management in Hong Kong.

The Hang Seng property subindex rose 1.4 percent.

Sun Hung Kai Properties jumped 2.3 percent to HK$142 in heavy trade. Cheung Kong (Holdings) Ltd climbed 1.3 percent to HK$119.90.

Momentum also spilled over to mainland financials.

Ping An Insurance ramped up 1.5 percent to HK$61.5. Rival China Life climbed 1 percent to HK$31.80.

Agencies

(China Daily 02/29/2008 page15)