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HK stocks reach new high on capital influx prospect

Stocks in Hong Kong reached a new record by the close today. The Hang Seng Index (HSI) added 708.16 points, or 2.74 percent to 26,551.94.

HSI has gained 23 percent since August 20 when China announced that the mainland residents with a Bank of China account in Tianjin s Binhai economic zone will be allowed to invest in Hong Kong stocks.

The Hang Seng China Enterprises Index, tracking Hong Kong-listed shares of mainland companies, today surged 712.38 points or 4.54 percent to a record close of 16,406.04.


PetroChina rose as much as 11 percent to an all-time high amid expectations that Asia s top oil and gas producer would get approval for a domestic listing in Shanghai.


Analysts attribute the recent strong growth in Hong Kong stocks, especially in those Hong Kong-listed mainland heavyweights, to the expected direct investment scheme and the qualified domestic institutional investor (QDII) program.

Investors were anticipating a future influx of liquidity from China, which is gradually relaxing investment restrictions for domestic institutions and individuals.


"Hong Kong s market outlook remains good and much of the rally is attributed to QDII," said Samantha Ho, a Hong Kong- based fund manager who oversees more than US$3 billion of Hong Kong and China equities at Invesco Asia Ltd.

"People are optimistic about the outlook for Hong Kong s stock market for the next three to 12 months. On the liquidity front, in addition to overseas funds, those from the mainland are also gradually coming in."


China Southern Fund Management Co, the nation s largest asset manager, and its partner are allowed to invest US$4 billion under the QDII program, the exchange regulator said last week.


DBS Vickers director Peter Lai said the stocks of mainland companies rallied as investors speculated that the price gap between A and H shares would narrow as money flowed into Asia s single largest bourse after Tokyo.


"We believe HSI could test 28,000 by the end of the year," said Eric Yuen, head of research at Dao Heng Securities. "Stocks of mainland companies are likely to outperform, with the resources and oil sectors benefiting most."

Source: China Daily  
Editor: kitty
Date: 2007-9-25 15:34:00

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