Hong Kong stocks rose 0.18 percent to a fresh 6-1/2-year closing high on Wednesday, lifted by gains in market heavyweight China Mobile, while H-shares ended at their highest level in nine years.
The benchmark Hang Seng index had fallen as much as 0.7 percent before following Japanese and South Korean markets to reverse course, gaining 33.25 points to end at 18,048.09. Turnover was HK$28.19 billion (US $3.6 billion), compared to Tuesday's HK$33.7 billion.
The H-share index of Chinese companies listed in Hong Kong finished up 0.53 percent at 7,441.04, its highest level since August 1997, boosted by a 2.5 percent gain in China Life Insurance to HK$16.6. "There's still a lot of cash in the market," said Tat Auyeung, portfolio manager at Apex Capital Management. "People are positioning themselves for next year; earnings and economic growth are still going to be in Asia, in China. People are just buying ahead of earnings."
The number of fund managers preferring to overweight Hong Kong rose to a five-month high amid a robust IPO pipeline and strong capital inflows, according to Merrill Lynch's latest Pacific Rim Fund Manager survey released on Wednesday. Top cellular carrier China Mobile edged up 0.26 percent to HK$59 ahead of its earnings due on Friday.
Mobile handset maker Foxconn International Holdings, the top blue chip loser, slid 2.5 percent to HK$25.4 in heavy volume after Motorola reported disappointing third-quarter sales, with negative implications for the Asian handset supply chain.
Mainland financial services firm China Everbright Ltd, which owns 21.4 percent of mid-sized lender China Everbright Bank, soared 18.1 percent to HK$6.4 in active trade, earlier tapping levels unseen since December 2001.
Everbright Bank is expected to receive a 20 billion yuan ($2.53 billion) capital injection from the government, ahead of its stock market listing next year, state media said on Wednesday. Demand for China Everbright spilled over into peer CITIC International Financial Holdings Ltd, which leapt 6.6 percent to HK$5.2, at one point trading at 8-1/2 year highs.
CIFH has not yet completed its acquisition of China Citic Bank, which is eyeing an IPO in the first half of next year. China Paradise Electronics Retail Ltd surged 3.4 percent to HK$2.16 as a breakthrough was seen for GOME Electrical Appliances to acquire its smaller rival first announced in July.
GOME's offer for China Paradise has been declared unconditional as to acceptances as China Paradise shareholders representing 95.3 percent of the issued capital have accepted the offer.
COSCO Pacific the container leasing and terminal operator, saw follow-through buying, gaining a further 3.2 percent to HK$15.64, a day after the company said its total container throughput in September rose 30 percent year-on-year.
China National Building Material Co extended Tuesday's gains, jumping 3.7 percent to HK$4.17, earlier setting a new peak, a day after Irish building materials company CRH Plc said it had signed a deal to buy a stake in the cement operations of China's Jilin Yatai Group.
Morgan Stanley raised CNBM's price target to HK$5 and increased its earnings forecast by 13-20 percent in 2007-2008 on cement capacity expansion and revenue growth in its engineering service unit, the bank said in a research note dated October 18.