Hong Kong stocks had their biggest one-day gain in three months, led by property and banking stocks, on signs that the US Federal Reserve is nearly done raising interest rates.
"Investors, who had previously stayed on the sidelines, were buying aggressively as sentiment improved and the stronger overseas markets provided confidence," said Alex Tang, a director from Core-Pacific Yamaichi. "A sharp rise in turnover aided momentum."
The blue chip Hang Seng Index rose 1.71 percent, or 255.29 points, to close at 15,200.06, the biggest advance since September 20. The index opened 1.12 percent higher, extending a 0.46 rise on Tuesday.
Turnover was more than double the previous session's at HK$34.5 billion (US $4.4 billion), compared to HK$16.8 billion on Tuesday. A stronger Chinese yuan also fuelled demand for Chinese financial stocks, boosting the Chinese Enterprises H-share index to end 2.9 percent up to 5,569.99 after a 1.6 percent rise on Tuesday.
The yuan hit a post-revaluation record high against the dollar in early Wednesday morning trade.
Traders said interest rate-sensitive stocks such as property and banking counters were in demand as the Fed comments boosted expectations local rates may also be near a peak. Hong Kong typically follows US rate moves because its currency is pegged to the US dollar. A series of rate rises last year cooled demand for property and dampened consumer sentiment.
HSBC Holdings Plc, the most heavily traded stock, gained 1.2 percent to HK$126.40, and China Construction Bank rose 3.6 percent to end at record high of HK$2.90.
Bank of Communications surged 6.9 percent to hit an all-time high of HK$3.875 before it ended at HK$3.80, and Bank of China Hong Kong rose 2 percent to HK$15.30.
The Hang Seng blue chip property index surged 3.11 percent to 18,594.22 points with Cheung Kong Holdings Ltd up 3.1 percent to HK$82.35, Sino Land Co Ltd rising 3.2 percent to HK$9.8 and Sun Hung Kai Properties gaining 2.8 percent to HK$77.60.
Gold hovered near a three-week high and fuelled demand for mining stocks, boosting gold miner Zijin Mining Group Co Ltd to an all-time high of HK$4.00 before it ended at HK$3.825, up 6.3 percent from previous close.
Mobile handset maker Foxconn International Holdings Ltd soared 5.7 percent to new high of HK$13.80 before it closed at HK$13.60. Merrill Lynch has raised its target price for Foxconn to HK$16.40 and lifted its earnings per share estimate by 7 percent for 2006 and 10 percent for 2007 on optimism that the firm would benefit from strong handset growth.
Macau casino mogul Stanley Ho's Melco International Development Ltd gained 3.4 percent to HK$9.25. Star Cruises Ltd, which is in joint venture that is one of three finalists for Singapore casino, surged 10.5 percent to HK$2.40.
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