Hong Kong stocks ended up 0.34 percent on Monday on a technical rebound amid quiet trade, with investors looking for bargains after a steep sell-off last week.
Hong Kong's blue chip Hang Seng Index rose 50.98 points to 14,898.77. Turnover was light ahead of a public holiday on Tuesday, with HK$13.7 billion (US $1.8 billion) of shares changing hands compared to HK$18.53 billion on Friday.
Shares are seen inching up to the psychologically-important 15,000 level, but investors will remain cautious ahead of US inflation data due out on Friday, traders said.
The relative strength index stands at 32, up from 27 at midday. A reading below 30 indicates oversold conditions.
Investors were also cautious ahead of the maiden policy address of Hong Kong's new leader, Donald Tsang, on Wednesday. He is expected to unveil how he plans to further integrate the city's economy with that of mainland China while maintaining Hong Kong's capitalist ways.
"The chief executive is not expected to unveil any new policies in his speech, but if he is positive on Hong Kong's economy that may give the market a push," said Kenny Tang, associate director at Tai Fook Asset Management.
Property stocks fell on continued interest rate worries, traders said, with Sun Hung Kai Properties Ltd down 0.45 percent at HK$76.80.
The Hang Seng Properties sub index fell 0.09 percent to 18,415.2.
Shares in China Resources Enterprise Ltd, the top blue chip gainer, rose 4.53 percent to HK$12.70 after Merrill Lynch said it is reinstating coverage of the company with a "buy" recommendation, citing the company's transition from a conglomerate to a consumer-focused company.
Shares in chip design firm Solomon Systech (International) Ltd rose 8.85 percent to HK$3.075 as investors snapped up the stock after it fell following a share sale last week, traders said.
Heritage International Holdings Ltd plummeted 38.71 percent to HK$0.057 after it said on Monday it planned to raise HK$234 million (US $30 million) through a rights issue, raising capital for investment in property, advertising, and Internet-related businesses.
China's No 2 mobile carrier, China Unicom, rose 1.63 percent to HK$6.25 after Morgan Stanley raised its rating on the company to "equal-weight" from "underweight", citing expected consensus-beating earnings for the third quarter.