HK stocks ring up 39 pct gain for '07, best since '99

(Adds Monday close, details)

By Judy Hua

HONG KONG, Dec 31 (Reuters) - Hong Kong blue chips ended the
year on a high note on Monday, ringing up a 39 percent gain for
2007 to make the index Asia's fifth best-performing bourse this
year, and representing its best annual rise since 1999.

The benchmark Hang Seng Index hit an all-time high in late
October, but has been dogged since by delays in the launch of a
scheme allowing mainland Chinese to directly invest in the city's
listed securities and U.S. subprime mortgage problems.

In contrast, Japan's benchmark Nikkei .N225 fell 11 percent
in 2007 -- making Tokyo the world's worst-performing major stock
market -- while China's Shanghai Composite Index .SSEC soared
97 percent.

Investors are bullish about next year, but the market could
be volatile due to weak U.S. consumption and a long-predicted
slowdown on the back of China's tightening measures to cool the
country's torrid pace of growth.

"There will be some rally early next year because of the
long-expected U.S. interest rate cut in January, providing strong
buying support at a lower level," said Andrew To, sales director
of Tai Fook Securities.

"Also, there will be some rally on (China's) A-share market
before the Chinese Lunar New Year, which falls in early February.
Hopefully they will support the Hong Kong market.

"I'm quite positive on shares which have suffered big losses
over the past few months. I expect the Hang Seng Index to go up
to about 30,000 by Lunar New Year."

The Hang Seng Index finished Monday's half-day session up
1.62 percent at 27,812.65 on mainboard turnover of HK$43.4
billion (US$5.6 billion). It now stands 13 percent below its
all-time peak hit in October.

The China Enterprises index of H shares .HSCE, or Hong
Kong-listed shares in mainland companies, rose 0.83 percent to
16,124.72.

Hong Kong's IPO market -- the world's second-biggest --
showed signs of slowing in the fourth quarter of this year, but
is likely to be robust in 2008, with Ernst & Young projecting
HK$260 billion worth of first-time stock offerings next year.

Local media have reported Hong Kong stock offerings raised
about HK$287 billion this year.

Property shares shot up on Monday on expectations the U.S.
Federal Reserve would cut interest rates in January.

Cheung Kong (0001.HK) jumped 4.8 percent to HK$144.20, Sun
Hung Kai Properties (0016.HK) rose 4.15 percent while Hang Lung
Properties (0101.HK) soared nearly 6 percent.

China Eastern (0670.HK) jumped more than 6 percent and Air
China (0753.HK) shot up 7 percent after sources told Reuters on
Friday that Air China's chairman had been appointed chief of
China's civil aviation regulator. [ID:nSHA234432]

China's top offshore oil and gas producer CNOOC (0883.HK)
jumped 3 percent and Asia's top oil and gas producer PetroChina
(0857.HK) rose 2 percent as oil bounced above $96 on geopolitical
worries.

Top Asian oil refiner Sinopec Corp (0386.HK) (SNP.N) rose
nearly 2 percent before closing the day up 0.68 percent at
HK$11.78 after it unveiled a plan to buy interests in three oil
refineries and 63 petrol stations from its parent for a total of
3.66 billion yuan.

Hong Kong's stock market rally marks the best annual gain
since 1999, when investors ploughed into up-and-coming technology
stocks such as then-Pacific Century Cyberworks, as much of Asia
chalked up gains after the 1997/98 Asian financial crisis.
(US$1=HK$7.8)
(Reporting by Judy Hua; Editing by Anne Marie Roantree)

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