PICC P&C, tipped to be the highest leveraged company in the mainland insurance sector, surges 17.48 percent yesterday. Bloomberg

Hong Kong shares ended yesterday's skittish session 0.55 percent higher as mainland insurers soared on talk that Beijing is set to introduce new policy measures that will widen their scope of investment. The benchmark Hang Seng Index (HSI) ended 83.26 points higher at 15,130.21.

Non-life insurer PICC P&C, tipped to be the highest leveraged company in the sector, surged 17.48 percent.

But anemic turnover - HK$40.3 billion - suggested many investors were staying on the sidelines awaiting the interest rate decision from the Federal Reserve (Fed).

"It's been a pretty dull day with people just waiting around to see what the Fed decides and the fate of the US carmakers," said Andrew To, sales trader with Taifook Securities.

Property counters also rallied on increased speculation over interest rate reductions and tax cuts on property transactions on the mainland.

China Overseas Land Investment gained 4.52 percent.

Guangzhou R&F Properties, which operates in southern China, one of the worst affected regions in this year's property price free fall, soared 8 percent. The stock has fallen more than 75 percent this year, far underperforming the 46 percent drop on the main index.

"We are just seeing a lot of window dressing in badly battered sectors. Investors are ready to ignore the bad news and buy up on any excuse like possible support measures from the mainland," said Ben Kwong, chief operating officer with KGI Asia.

"The index will stay around the 15,000-point level as we enter the year-end rally. And the musical chairs game will continue up until then."

The mainland has aggressively cut interest rates and rolled out an ambitious stimulus plan to bolster its economy as exports slow.

The China Enterprises Index of top locally listed mainland firms rose 0.73 percent to 8,063.75 led by a 3.4 percent gain in top insurer China Life.

China's biggest shipping group, China Cosco, cut losses to 0.71 percent after opening down nearly 12 percent, as the rally in the broad market and another day of gains on the global freight index helped limit the sell-off in the stock after the company announced nearly 4 billion yuan in hedging losses.

"If you look at the fundamentals of this company, Baltic Dry Index is still on a downtrend, freight rates are at their lowest in many years and the global economy is still hurting," said Linus Yip, strategist with First Shanghai Securities.

"All signs are pointing to weaker international trade but investors are using the short-term rally in the freight index as an excuse to buy shipping stocks."

The Baltic Dry Index, which measures changes in the costs of shipping commodities, rose 5 percent overnight, adding to last week's 15 percent rally.

Mainland carmaker Dongfeng Motor Group rose 5.99 percent on hopes that certain moves to protect growth in its auto industry are in the pipeline. The government announced it will aid the industry after mainland's passenger car sales in November fell 10 percent from a year earlier, this year's third monthly drop.

Reuters

(HK Edition 12/17/2008 page3)