Hong Kong stocks rose 0.5 percent on Tuesday as a strong rebound in mainland-listed equities spurred buying interest, with mainland lender Industrial & Commercial Bank of China getting a further boost from a broker upgrade.
With no single sector dominating the day's trade amid the market's consolidation, one standout was newcomer Fosun International Ltd which rallied more than 7 percent at one point, as investors saw value in the mainland conglomerate a day after its debut saw profit-taking.
Mainland stock markets were hit by a sell-off on Monday, ahead of a slew of economic data out of China later in the week. Expectations are high for China's June consumer price index, an inflation indicator, to surge above 4 percent and trigger an interest rate increase by the country's central bank.
But any pullback over the prospect of more tightening measures by Beijing could be reversed, thanks to ample funds in the market, said Andy Lam, strategist at Harris Fraser. "Market sentiment is very strong," Lam said.
"Whenever there's a dip, people will buy on weakness. Since liquidity is the main driver, economic data is only a secondary concern." The benchmark Hang Seng Index closed up 103.36 points at 23,057.30, reversing a soft opening. Mainboard turnover was HK$78.0 billion (US $10 billion) compared with Monday's HK$75.9 billion. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, climbed 0.4 percent to 13,081.88.
The Hang Seng property sub-index outperformed with a 0.9 percent gain, led by large-cap real estate developer Cheung Kong (Holdings), which jumped 2.1 percent to HK$109.60. Swire Pacific climbed 1.7 percent to HK$91.80. ICBC rang up a 2.1 percent rise to HK$4.79. J.P. Morgan upgraded China's top lender to overweight from neutral on its defensive and high-growth potential, setting a HK$5.80 target price.
Fosun finished up 3.1 percent at HK$10.66 in heavy trade. Coal stocks jumped, as follow-through buying in China Coal lifted shares up nearly 2 percent to HK$15.26, a day after the coal producer rallied on news of its plans to list in Shanghai.
China Shenhua Energy rose 1.1 percent to HK$31.85 after saying its commercial coal production rose 14.5 percent year-on-year in the first half of 2007. Coal sales volume grew 21 percent in the period and gross power generation surged 55.8 percent, the company said. HSBC Holdings Plc rose 0.5 percent to HK$145.60. A UK paper said the global bank had contacted Lone Star about buying Korea Exchange Bank (KEB) from the US private equity fund.