Hong Kong stocks ended over one percent higher on Friday, with investors encouraged by interest rate cuts by most major banks and a fall in oil prices. Hong Kong's blue chip Hang Seng Index closed 1.17 percent, or 159.95 points, higher at 13,784.46. Turnover was heavy at HK $23 billion (US $2.9 billion) compared to HK $18.7 billion at Thursday's close.
The Hang Seng reached 13,822.11 at one point, coming close to resetting the year's peak of 14,058.21 on March 1. The index has gained 2.15 percent over the week and 9.6 percent since the beginning of this year.
By comparison, the blue chip Dow Jones industrial average has gained a mere 0.15 percent so far in 2004. A rate cut by some of Hong Kong's major lenders helped sentiment, pushing the market further into overbought territory.
The 14-day Relative Strength Index rose to 77.88. A reading above 70 normally indicates overbought conditions. "Market sentiment is quite positive a lot of institutional investors bought HSBC shares and this pushed the whole market up," said Francis Luan, general manager at Fulbright Securities.
Banking giant HSBC Holdings Place. gained 1.51 percent to HK $134.50, a day after the city's biggest lender announced a cut in its best lending rates, despite a rate hike by the Federal Reserve and the Hong Kong Monetary Authority.
Most other banks in the territory also cut rates. HSBC is also in the final stage of talks to acquire Korea First Bank for about $3 billion, Korea Economic Daily said in its on Friday edition, quoting an unidentified source.
A senior South Koran official confirmed HSBC was in talks to buy the bank but an HSBC spokeswoman declined to comment. Property stocks outperformed the Hang Seeing as the cut in prime lending rates by some banks lowered mortgage rates and fuelled investor enthusiasm.
The Hang Seng Properties sub index rose 1.89 percent, or 320.31 points, to 17,296.77. Hong Kong's largest property firm, Sun Hung Kai Properties Ltd, rose 1.98 percent to HK $77.25.
Traders said China's October consumer price index data, released on Friday, and would lend support to China enterprise stocks, also known as H-shares.
Economists said the CPI report reinforced other data to indicate there was reduced pressure to raise interest rates again soon. But others said it was to declare victory over inflation and that more rate hikes were inevitable.
Chinese airline stocks benefited from a drop in oil prices. China Southern Airlines Co Ltd was the top gainer among H-shares, climbing 4.88 percent to HK $3.225. But lower oil prices hurt Chinese offshore oil and gas producer CNOOC Ltd, which fell 1.19 percent to HK $4.15.
Oil prices tumbled more than a dollar overnight, resuming a two-week decline that has cut 15 percent from prices, as rising crude inventories eased concerns about a winter fuel crunch.