Hong Kong blue chip stocks rose 0.25 percent on Friday, boosted by better-than-expected earnings from China Mobile. The benchmark Hang Seng index closed 34.91 points higher at 13,890.93. It was up 1.17 percent over the week. Turnover was HK$15.33 billion ($1.97 billion). Dealers said political uncertainty, which had capped the market, was dissipating after Chief Executive Tung Chee-hwa confirmed his resignation on Thursday, ending more than a week of speculation about his political future.
Chief Secretary Donald Tsang will take over as acting leader after Beijing confirms Tung's resignation, which is expected at the weekend. Sources say Tsang has also been selected by Beijing to be the city's next chief executive until mid-2007.
No major changes are expected in his governing team or the government's business-friendly, conservative policies. China Mobile, the world's largest mobile phone carrier by subscribers, posted an 18 percent gain in 2004 profit on Friday to 42 billion yaun (US$5.1 billion), beating a forecast of 40 billion yuan.
China Mobile shares ended 2.61 percent higher at HK$25.60 on the news. Expectations of higher interest rates have also been factored in, some dealers said. "The market has already digested a possible rate hike here," said Alfred Chan, chief dealer at Cheer Pearl Investment. But other traders said speculation about higher interest rates is likely to intensify in the lead-up to the US Federal Reserve rate meeting on March 22, where another rise is widely expected.
Hong Kong usually follows US rate moves as its currency is pegged to the greenback. While local banks have been able to resist recent increases due to a flush of liquidity in the banking system, recent signs have pointed to an outflow of funds.
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