Hong Kong shares bounced off a two-month low and closed with a slight gain on Thursday, driven by a strong recovery in HSBC on bargain-hunting. The UK-based lender's shares gained 3.6 percent, breaking an eight-day fall, which had been driven by its weak financial position. HSBC's gains largely accounted for the benchmark Hang Seng Index's rise of 74.36 points or 0.6 percent to close officially at 12,657.99.
Investors snapped up other previously beaten down stocks, including second-tier shares, as sentiment improved on the back of Wall Street's rebound overnight. But the market's overall gains were capped by caution ahead of the Lunar New Year holidays next week, analysts said. "HSBC had been down the past several days, so we saw a technical rebound today," said DBS Vickers analyst Gideon Lo.
"Initially, sentiment was good because of the positive impression created by newly elected US President Barack Obama, but market confidence is still quite weak," he said. Mainboard turnover dropped to HK$35.4 billion from Wednesday's HK$39.6 billion. "The US market rallied last night but the Asian markets were not closely following because of caution. People were not really buying aggressively ahead of the holidays," said Y.K Chan, strategist at Phillip Securities. Conglomerate Hutchison Whampoa jumped in opening trade but pulled back since, registering a 0.14 percent gain.
Resuming trade after Wednesday's suspension, Shun Tak Holdings Ltd vaulted 24.2 percent to hit HK$2.67 at the close of trade. Shun Tak and Mandarin Oriental International said they had agreed to sell a Macau hotel to gaming tycoon Stanley Ho's flagship company in a deal worth HK$1.6 billion ($205 million). Shun Tak also announced a stake disposal worth HK$740 million and a share buyback, subject to shareholder approval.
The China Enterprises Index of top locally listed mainland firms firmed 0.44 percent to 6,760.77 points. The mainland's top lender ICBC edged up 1.57 percent, while China Construction Bank gained 1.6 percent. Electricity generator China Power International rose 1.5 percent in line with the market's firm tone.
The company said on Wednesday it expected to report a loss for 2008 due to surging coal prices and an impairment loss related to the closure of smaller generation units. China Shipping Container Lines, the world's eighth-largest container shipper, slipped 1.8 percent after the company said its 2008 earnings likely fell more than 50 percent as export cargoes from China dropped and global shipping capacity growth exceeded demand.
The company also said surging prices of fuel in the first half of the year drove up costs. Consumer goods exporter Li & Fung jumped an unusually high 5.9 percent, although the company said it was not aware of any reason for the stock's rise.