Strong growth in mainland shares helped shore up the Hong Kong market by 1.16 percent yesterday.

Property developers and big oil companies also contributed with big gains of their own.

Sinopec Corp, the most heavily traded stock, surged 7.8 percent - its biggest gain since March - on mounting speculation that government authorities are close to permitting oil companies to raise prices on refined petroleum products.

It was the third-straight day of gains for Asia's top refiner, which gained 12 percent during the span.

CNOOC also jumped 3.5 percent on expectations of optimistic earnings.

Speculators are betting the mainland will allow petroleum-product prices to rise before the Olympics, but cautious analysts say investors are overly optimistic about the mainland's energy-price reform.

"The authorities have been discussing lifting the oil-product prices, wanting to peg the prices to the international standard," said Anna Yu, an energy analyst at Taifook Securities. "However, there is the growing inflation to consider."

"Even if authorities decide to increase the prices, they won't do it all at once," Yu said. "They will increase them little by little - say 10 to 15 percent at a time."

So, the price reform won't help improve Sinopec's heavy losses overnight, she told China Daily.

The benchmark Hang Seng Index closed 267.81 points higher at 23,325.80 yesterday amid the improved turnover.

The China Enterprises Index of top locally listed mainland shares soared over 2 percent to 12,829.33 points.

The rebound in the mainladn stock markets helped improve the overall market sentiment in Hong Kong," said Castor Pang, a strategist at Sun Hung Kai Financial Group.

Mainland stocks rose for the first time in 11 days after the benchmark index had fallen 50 percent from its record high as some investors decided the shares had been over sold.

Hong Kong's biggest property developer, Sun Hung Kai Properties, saw a sharp 4 percent rise to HK$118.80 after Goldman Sachs raised the stock's rating from "neutral" to "buy", saying the developer's 31 percent plunge this year provides investors with a good entry point.

"Despite the macroeconomic slowdown concerns, we expect the housing-price correction in the next few months to be limited, which we think supports a recovery in Sun Hung Kai's stock price," Goldman Sachs said in a report, setting the target price on the developer's stock at HK$148.30.

'Lukewarm' debut

Shandong Chenming Paper fell on its trading debut yesterday. The stock lost 10.6 percent to HK$8.05, down from its initial public offering (IPO) price of HK$9.

"I am not surprised about the lukewarm trading debut for Chenming," said Ben Kwong, chief operating officer at KGI Asia. "Investors are skeptical about equity trading, especially IPOs, which are not a guaranteed investment anymore."

Shandong Chenming, China's largest paper producer in terms of revenue, raised HK$3.2 billion after fixing its IPO price at the bottom of the indicated range of HK$9 to HK$11.80.

Even with its stock priced at the low end, the paper maker saw the largest Hong Kong IPO in the second quarter of this year.

(HK Edition 06/19/2008 page2)