HONG KONG: Hong Kong stocks soared to a 15-month high yesterday on hopes that banking giant HSBC's gains for the third-quarter indicate a solid recovery is on the way.

HSBC advanced as much as 6.2 percent to HK$94.2, its highest since October last year, before ending 6 percent higher at HK$94.

The growth helped drive the benchmark Hang Seng Index 1.61 percent higher, for a gain of 359.05 points, to 22627.21, closing the fourth consecutive session of gains. Turnover was HK$72.3 billion, compared to a volume of HK$70.5 billion on Tuesday.

Boosting the financial sector's outlook, HSBC said on Tuesday that its third-quarter pretax profit was "significantly" higher than a year ago as provisions at its US consumer-finance division declined.

Without any definite support for further growth, analysts suggest the strong rally may present a good opportunity to cash out holdings.

"The room for any upside is small. It's the right time to quit when the index reaches 23,000 points," said Peter Lai, a director at DBS Vickers.

Hong Kong tycoon Lee Shau-kee said earlier that he would cash out about half of his holdings when the Hang Seng Index reaches 25,000 points.

However, other analysts say there is still room for upsurge because the stocks' valuations are relatively low.

Another bank had an even better day: Bank of East Asia, the third-largest Hong Kong's local bank by market value, increased 15 percent to a 15-month high of HK$33.35, amid market speculation that Guoco Group, an investment management company controlled by a Malaysian billionaire, may offer to buy the bank.

Guoco has raised its stake in Bank of East Asia to 8 percent from 5 percent in March. Last week, Guoco increased its stake in the lender again, to 8.01 percent, and more stake purchasing is anticipated.

Analysts say the Malaysian businessman Quek Leng Chan is keen to tap into the market of the mainland and Bank of East Asia's good network in the area makes it an attractive target to Guoco.

Economic data from Beijing also fuel yesterday's growth. The State Statistics Bureau reported yesterday that the country's industrial production jumped 16.1 percent from a year earlier and retail sales gained 16.2 percent.

(HK Edition 11/12/2009 page3)