Hong Kong-listed China plays ended up 0.4 percent on Thursday, having touched a new high during the day, as oil-related shares rallied on record crude prices and a decision by China to lift domestic fuel prices.
Top Asian refiner Sinopec Corp jumped nearly 10 percent on expectations of wider profit margins after China unexpectedly raised domestic gasoline and diesel prices by one-tenth, the first increase in 17 months.
But with the broad market overbought and trading at 22 times 2007 earnings, investors were cautious. "It's hard to make progress on the upside. The resistance at these levels is huge," said John Schofield, director at Tempus Investments.
The index closed up 0.5 percent, or 140.30 points, to end at 31,492.88 on mainboard turnover of HK$164 billion (US $21 billion) compared to Wednesday's HK$154.2 billion.
The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 0.4 percent to 20,164.22, having earlier hit a fresh peak at 20,609.10. Oil producer PetroChina Co Ltd set life highs before settling up 2.6 percent to HK$19.90, thanks to a rise in crude prices to $96 a barrel.
Sinopec Corp, the day's most active stock and the market leader, shot up 9.4 percent to HK$12.76. Investors also bought shares in mainland property developers, having run up Hong Kong property developers ahead of the widely expected US rate cut.
Mainland real estate plays struck records, shrugging off expectations China will introduce more steps to cool the red-hot property market following strong economic data last week. China Overseas Land and Investment Ltd leapt 6.8 percent to HK$19.54. R&F Properties shot up 7.8 percent to HK$43.4 in heavy trade.
The outlook for Hong Kong property developers should remain positive after HSBC Holdings plc said on Thursday that it would lower its best lending rate, but some analysts said a recent rally in the stocks was overblown.
Among mainland lenders, Bank of Communications slid 3.4 percent to HK$13.54 and top Chinese lender Industrial & Commercial Bank of China dropped 2.7 percent to HK$7.12. But Bank of China jumped 2.6 percent to HK$5.19 on the back of strong quarterly earnings reported earlier in the week.