Hang Seng Index hit a new high in two months of 15,577 points, up 5.59 percent yesterday. China Daily

Hong Kong shares soared 5.59 percent yesterday to close at a two-month high as investors hoped that the central government will unveil more stimulus packages to boost the economy. The speculation propelled the benchmark index to a high of 15,577.74 points for the first time in two months.

The Hang Seng Index (HSI) ended up 824.52 points, or 5.59 percent. The HSI yesterday opened with a surge of 193 points. The rally accelerated after the afternoon break on speculation that the central government will launch more policies to spur domestic consumption.

Index movers China Mobile and HSBC took the lead in pushing up the rally. China Mobile went up 5.44 percent to HK$82.25, while HSBC gained 4.4 percent to HK$87.7.

Boosted by the optimistic sentiment, mainland-related shares outpaced their peers, especially those linked to infrastructure development.

Shares of China Communication Construction advanced 6.23 percent to HK$9.88, while China Railway Construction Corporation and China Railway rose 6.19 percent and 4.96 percent, settling at HK$12 and HK$5.5, respectively.

The Civil Aviation Administration of China announced yesterday it will lift some surcharges for mainland aviation firms. That caused shares of Air China to soar 22.06 percent, closing at HK$2.6.

Oil stocks also made a stellar performance. CNOOC's shares surged 12.7 percent to HK$7.45. PetroChina soared 5.96 percent to close at HK$7.11.

Mainland property shares saw a significant rebound in recent weeks after mainland lenders loosened their credit limit. China Overseas Land went up 2.03 percent to HK$12.04. R&F Properties increased 3.22 percent to HK$8.

Daily turnover was about HK$61.9 billion. The index has gained 15 percent over the previous five trading days.

The Hang Seng China Enterprise Index, which tracked the performances of mainland enterprises listed in Hong Kong, rose 6.32 percent to ease at 8,507.

Linus Yip, a strategist with the First Shanghai Securities, said that the market has come out of last month's sluggishness in view of a slew of stimulus packages from the US and the mainland.

"The change of market sentiment prompted institutional investors to get back on the market for undervalued stocks," he said. "Whether the recovery is sustainable will depend on the size of the stimulus packages."

Patrick Shum, chief portfolio strategist at Karl Thomson Securities, predicted that the index might witness the next technical barrier of 17,600 in the short run.

"Due to the heavy speculation, shares from different mainland sectors will shoot up temporarily, so it is hard to decide which shares (sector) will truly benefit from the policies in the long run."

(HK Edition 12/11/2008 page2)