Hong Kong stocks leapt 2.54 percent on Friday to a six-week high, as easing interest rate worries sparked a broad-based rally led by commodities and property shares like Hang Lung Properties Ltd. The benchmark Hang Seng index gained 402.4 points to 16,267.62, for a weekly gain of 2.9 percent.
The China Enterprises index of H-shares, or Hong Kong-listed shares in mainland companies, gained 3.19 percent to 6,784.60, its highest closing level in six weeks. Turnover was HK$40.5 billion (US $5.2 billion), the highest since June 8.
The statement following the US Federal Reserve meeting which ended Thursday signalled that the central bank may pause after its latest interest rate increase. Hong Kong interest rates tend to track the US cycle, since its currency is pegged to the US dollar.
"People hung on one sentence in the Fed's statement and that turned the table in terms of interest rate expectations," said Kent Yau, deputy research director at Core Pacific Yamaichi International (Hong Kong) Ltd. But some said the market could be getting ahead of itself.
"A rate hike of 25 basis point is the best case scenario," said Renault Kam, director at Atlantis Investment Management (Hong Kong) Limited. "But I'm not sure if it's over or not. The leading indicators show there's room for more rate hikes."
Still, with stocks above the key psychological 16,000 level for the first time since early June, the market is "fair in terms of fundamentals", Yau said.
Property shares, which have lagged the market, swung into force with the Hang Seng property sub-index rising 3.7 percent to a three-week closing high of 19,576.66.
Hang Lung Properties rose 6.1 percent to HK$13.90 and Cheung Kong (Holdings) Ltd advanced 3.7 percent to HK$84.15.
Renewed buying in the commodity market drove up resource shares like gold miner Zijin Mining Co Ltd, which rocketed up 8.4 percent to HK$3.875. Jiangxi Copper Co Ltd soared 6.7 percent to HK$7.20. Rising coal prices pulled up coal producer China Shenhua Energy Co Ltd to HK$14.35, for a 6 percent gain. Oil producer PetroChina Co Ltd shot up 3.8 percent to HK$8.30 as crude prices continued to climb.
Chinese power generating stocks jumped after China raised the average retail price for electricity by 0.025 yuan per kilowatt hour. China Resources Power Holdings Co Ltd vaulted 12.1 percent to HK$6.50, having earlier set a new peak. Huaneng Power International Inc, which announced plans earlier in the day to raise tariffs of some of its power plants, gained 3.5 percent to HK$5.15.