Hong Kong stocks finished higher on Wednesday, quickly recovering from the global market stumble that followed unrest in Egypt, as investors bet that asset inflation and a stronger world economy would lift the market. The benchmark Hang Seng Index rose 1.81 percent to 23,908.96, bringing gains for the Year of the Tiger to about 18 percent. The local market will reopen on Monday after a long weekend to mark the Lunar New Year.
Markets in mainland China reopen on January 9 Gains were seen across the board with no benchmark constituent trading in the red. Financials and Hong Kong developers outperformed. "The trend of a weakening US dollar is translating into a weaker Hong Kong dollar because of the pegged exchange rate," said Cusson Leung, head of Hong Kong research at Credit Suisse, adding that the resulting asset inflation was difficult to stop.
Leung said the key theme in 2011 in Hong Kong would be inflation for consumer and asset prices. Cheung Kong (Holdings) Ltd, controlled by billionaire Li Ka-shing, surged 5.7 percent and was the top gainer on the Hang Seng Index. Hutchison Whampoa Ltd rose 5.5 percent and is about 5 percent shy of its 2007 peak.
Banks rose led by heavyweight HSBC Holdings Plc, up 2.1 percent and the biggest boost to the benchmark index. Emerging markets-focused rival Standard Chartered Plc rose 2.5 percent. There was a broad rally in Asia on the back of a surge in US manufacturing data and strong company earnings. Stocks on Wall Street ended at their highest level since June 2008.
Copper prices, often considered a barometer for global economic activity, rallied to a record high buoyed by positive data from the US and China, bullish chart patterns and a weakening US dollar. Cyclical stocks - those most directly affected by economic trends - bounced back after consolidating for a few sessions. Jiangxi Copper Co Ltd rose 3.4 percent, while China Cosco Holdings Co Ltd rose 3.6 percent.