Hong Kong stocks ended higher on Thursday getting a shot in the arm from the successful trading debut of China's largest dairy firm, while rotational buying lifted laggard blue chips such as China Unicom and PCCW.
But traders said low turnover meant Hong Kong shares would lack upward momentum, with players sidelined ahead of a holiday in the US on Friday and few signs of large foreign funds inflows.
The blue-chip Hang Seng Index finished up 0.67 percent at 12,422.87.
Volume was in line with recent averages with HK $13.68 billion (US $1.75 billion) changing hands. However, turnover was much thinner than earlier this year when daily volume averaged HK $21 billion daily as foreign funds poured into Hong Kong thanks to a weak US dollar and strong demand for China plays.
"I don't think we're getting a lot of overseas money into this market. This is quite a sober market," said Howard Gorges, director of South China Brokerage.
But sentiment towards IPOs in the territory is showing signs of warming up. Shares in China's Mengniu Dairy ended at HK $4.875, up 24.2 percent from the firm's offer price of HK $3.925 after investors piled into the company's US $176 million IPO on China's growing demand for milk.
"The strong performance was quite reasonable given most players are optimistic about the consumer market in China," said Kenny Tang, associate director at Tung Tai Securities.
While the demand was weaker than for deals struck at the height of an IPO frenzy in Hong Kong in late 2003, it was better than many recent IPOs, indicating that investor interest for some primary offerings is returning after a lull in the market.
Fixed line phone company PCCW was the top blue chip gainer after investment bank UBS upgraded the company to "buy" from "neutral" citing its belief the company would begin paying a dividend this year. The bank also said it thought the outlook for telecoms firms was improving in Hong Kong.
PCCW surged 7.48 percent to HK $5.75.
However, China mobile carrier China Unicom was not far behind, rising 4.1 percent to HK $6.35.
China Unicom shares have lagged the benchmark index so far this year, shedding 15.86 percent.
Property shares, which have been weighed down by signs of declining new home sales ahead of a land auction next week, regained morning losses to close higher.
The Hang Seng properties sub index finished 0.62 percent higher at 14,833.42.
China plays were also firm after economic data indicated the government is making progress in reining back a booming economy.
The index of China enterprise stocks, known as H-shares, rose 0.36 percent to 4,300.54.
Aluminium Corp of China Ltd (Chalco) was 2.96 percent lower at HK $4.10, with other commodity stocks also losing ground.
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