Hong Kong's leading share index inched higher to close at a fresh six-month high on Friday, with China plays gaining most on hopes for market reforms and economic growth.
The blue chip Hang Seng Index ended up 0.11 percent at 13,224.93, its highest level since March 9.
"People are switching out of blue chips and into China shares. I think we could have a correction on blue chips next week," said Alex Wong, research director at Rexcapital Asset Management.
Car maker Denway Motors Ltd was the biggest blue chip loser. It fell 4.31 percent to HK$2.775 after Daiwa Institute of Research cut its rating to "under-perform" from "outperform" after Denway reported worse than expected first half earnings.
Investors also worried about the firm's outlook. China's auto industry faces fierce competition, price wars and over-capacity as local and foreign manufacturers invest billions of dollars in the sector.
The Hang Seng China Enterprise Index, which groups Chinese stocks listed in Hong Kong and has lagged the blue chip index lately, rose 1.83 percent to 4,570.09 points.
China has unveiled policy changes that should prop up its ailing stock markets as senior leaders meet in Beijing, traders said. They also rose on hopes that China would not need to implement more measures to rein in its hot economy after fresh economic data indicated a slowdown.
China's urban fixed-asset investment, which covers spending on things like roads and property, rose 30.3 percent in the first eight months of 2004 from a year earlier, down from 31.1 percent year-on-year in the first seven months.
Cement maker Anhui Conch Ltd jumped 10.61 percent to HK$10.95, Jiangxi Copper Ltd rose 6.33 percent to HK$4.20 and China Shipping Development rose 8.55 percent to HK$6.35.
Aluminium Corp of China rose 6.63 percent to HK$4.425 on surging international alumina prices as Jamaican shipments were disrupted by Hurricane Ivan port damage.
Trade was heavy at HK$22.9 billion (US $2.94 billion), more than Thursday's HK$15.8 billion although turnover was inflated by a HK$2.176 billion placement of shares in Hang Lung Properties Ltd.
HSBC sold 196 million Hang Lung Properties shares at HK$11.10 each, a discount of 8.26 percent to their Thursday closing price of HK$12.10 as it offloaded a holding it acquired in 1996. Hang Lung slipped 3.31 percent to HK$11.70 - holding well above the placement price.
Shares of small Hong Kong developer Nan Feng Group Ltd surged 33.85 percent to HK$0.087 after interim results showed the firm climbing into the black.
The developer posted after Thursday's close first-half to June 2004 net profit of HK$145.94 million (US $18.71 million), compared with a loss of HK$72.2 million a year ago.