Hong Kong stocks soar

Hong Kong stocks rose more than half a percent on Friday with Bank of America's announcement that it will take a stake in China Construction Bank further revving up the market after news of strong demand for the upcoming IPO of Bank of Communications. "This is a positive news item. The listing of Bank of Communications next week could also have a spillover effect on stocks," said Alex Tang, research director at Core Pacific Yamaichi International.
The blue chip Hang Seng Index ended up 0.57 percent, or 78.50 points, to 13,912.03. The index slipped 0.16 percent over the course of a largely range bound week of trade. Volume was above recent averages with HK$17.6 billion (US$2.25 billion) worth of shares changing hands.
Bank of America Corp, the second biggest US bank, said it would pay US$3 billion for a 9 percent stake in China Construction Bank in the largest single foreign investment in China's banking sector.
The news comes hot on the heels of strong demand for shares in China's Bank of Communications IPO, which starts trade next Thursday.
The new listing is expected to add a flurry of activity to an otherwise thin second quarter of trade, with investors sidelined on worries about further interest rate hikes and with investor funds tied up ahead of a rash of China IPOs.
"I expect 10-15 percent upside for BoCom on the first day of trade, and when the money gets released there should be more money for the market," said Alfred Chan, chief dealer at Cheer Pearl Investment Ltd.
The outlook for China fund raising in the early part of the year had been slightly tarnished earlier in the week after China's largest coal miner China Shenhua Energy fell below its offer price in its first day of trade.
Shenhua Energy closed flat at HK$7.50, or its offer price.
The next key resistance for blue chips is the psychologically key 14,000 level, traders said.
But momentum is seen limited ahead of a rate setting meeting by the US Federal Reserve in the last week of June, with most investors expecting the Fed to raise interest rates.
Hong Kong banks tend to move in tandem with the US central banks due the local currency's peg to the US dollar.
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