Hong Kong blue chips hit a record on Tuesday, buoyed by strong gains on Wall Street and Shanghai, and fuelled by high hopes for an influx of mainland funds after a top Chinese bank said it would launch a second fund to pour client money into the city's equity market.
The prospect of more fund flows sent the city's bourse operator Hong Kong Exchanges and Clearing Ltd rallying more than 7 percent to a new peak. China Mobile led the blue chips up 1.7 percent, while Hong Kong-listed China plays rang up a 3.4 percent gain, as higher crude prices lifted oil shares and top mainland coal producer China Shenhua Energy Co Ltd touched a record on its Shanghai listing plans.
KWG Property Holding Ltd's debut performed below expectations, as traders said the shares were too pricey. The market accelerated in the afternoon after mainland-listed equities gathered steam, with the blue chip Hang Seng Index ending up 378.41 points at 22,151.14, near its all-time intraday high.
"Wall Street is definitely a factor, and there's some feel good after President Hu's visit," said Howard Gorges, vice chairman at South China Brokerage, referring to Chinese President Hu Jintao's visit to Hong Kong to mark the 10th anniversary of the British handover of the city to mainland rule.
"But we may give up ground very quickly depending on the leads from Wall Street or Beijing," Gorges said, citing possible moves by Chinese authorities to impose further monetary tightening.
The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, also finished near its highs. It hit an intraday high at 12,419.12 before ending the day up 405.27 points at 12,406.39. Total turnover was the eighth-highest ever at HK$82.5 billion (US $10.6 billion), compared with Friday's HK$68.9 billion.
China's top lender, Industrial and Commercial Bank of China, said on Monday it had raised 4.45 billion yuan ($585 million) for its fund to channel client money into Hong Kong equities.
China Shenhua ramped up 6.6 percent to HK$29.10 after saying it planned to sell up to 1.8 billion shares in Shanghai and acquire a coal and a power unit from its parent. Top mainland oil producer PetroChina Co Ltd, the biggest boost to the H shares, surged 4.5 percent to HK$12.04.
Sinopec Corp ramped up 3.8 percent to HK$8.98. China Mobile shares, the biggest boost to the blue chips and the day's most active, vaulted 3.4 percent to HK$86.80. Hong Kong Exchanges and Clearing Ltd finished up 7.4 percent at HK$118.70 on the QDII outlook.
KWG Property, which focuses on Guangzhou developments, settled at HK$7.84, up 7.7 percent from its offer price after raising US $583 million in a Hong Kong initial public offering which was priced at the top of an indicated range. Hong Kong shipping line Orient Overseas (International) Ltd soared 8 percent to HK$82.50.
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