Hong Kong blue-chip stocks rose a mild 0.1 percent on Thursday but China enterprise stocks such as oil producer PetroChina surged as investors eyed lagging valuations amid fresh signs of strong Chinese economic growth. PetroChina Co Ltd, the nation's largest oil producer and Asia's most valuable company, closed at a record high, up 6.56 percent to HK$6.50.
Resource shares such as Jiangxi Copper also outperformed as investors continued to reacted to stronger-than-expected China economic growth figures posted on Wednesday and after sharp rises in Hong Kong blue chips.
"China stocks will stage a strong comeback in the third quarter," said Alex Tang, research director at Core Pacific Yamaichi International.
Tang said China shares also were likely to be supported by the view that China is unlikely to impose further macroeconomic austerity measures to cool its economy.
The China enterprise stocks index, better known as H-shares, rose 2.18 percent to 5,090.68. Tang expects it to tap 5,300 in the coming three months.
The blue-chip Hang Seng Index rose 0.12 percent, or 17.44 points, to 14,620.14.
Volume was heavy with HK$23.3 billion (US $2.98 billion) worth of shares changing hands.
China's top offshore oil producer, CNOOC Ltd, also surged, rising 3.2 percent to HK$4.825 despite growing signs it faces high hurdles in winning its bid to acquire US oil firm Unocal.
Jiangxi Copper Co Ltd climbed 5.8 percent to HK$4.075, while Aluminium Corp of China (Chalco) rose 5.5 percent to HK$4.80.
Maanshan Iron and Steel rose 3.85 percent to HK$2.70.
Blue-chip property stocks such as the city's top developer Sun Hung Kai Properties Ltd eased after the city's largest bank, HSBC Holdings Plc, raised its prime rate by 25 basis points to 6.50 percent, following a similar move by Bank of China Hong Kong on Wednesday.
Sun Hung Kai fell 0.8 percent to HK$79.40 after approaching 52-week highs at HK$80.75.
Sino Land Co Ltd fell 1.06 percent to HK$9.30.
"Technically speaking, property counters are overbought, banking stocks should now start to catch up with lending rate increases," said Philip Chan, head of research at Capital Securities.
Casual wear retailer Giordano International jumped 5.45 percent to HK$5.80 as analysts cheered the firm's licensing deal with Walt Disney, saying the sale of Disney products will help boost the firm's earnings and customer traffic.
Goldman Sachs on Thursday raised its profit estimates on Giordano by 2.9 percent, 6.4 percent and 7.5 percent for 2005, 2006 and 2007 respectively. The bank has also raised its share price target to HK$5.80 from HK$5.30, citing higher growth prospects, it said in a research note.