HK stocks seen up on U.S. rally, blue chips in focus

HONG KONG, April 2 (Reuters) - Hong Kong stocks should rise
on Wednesday after U.S. stocks shot up the most in two weeks as
strong demand for a Lehman Brothers LEH.N share offering raised
hopes that the worst of the credit crisis may have ended.

"The market will follow in the footsteps of Wall Street, and
should rise between 800 to 1,000 points," said Andrew To, sales
director at Tai Fook Securities. "But above the 24,000 level, it
will be vulnerable to profit taking."

The benchmark Hang Seng Index .HSI ended up 1.26 percent on
Tuesday at 23,137.46. The index seesawed in and out of positive
territory, rising as much as 2 percent at one point.

The China Enterprises Index of Hong Kong-listed
mainland companies .HSCE, or H shares, finished up 1.27 percent
at 12,237.36.
Market sentiment was hit on Tuesday as the Shanghai Composite
Index .SSEC fell more than 4 percent to an 11-month
closing low after the central bank repeated its commitment to a
"tight" monetary policy.
"The blue chips will gain today," To said. "But I have less
confidence in the H shares because they are still closely tied to
the market in China."

STOCKS TO WATCH:

* Kowloon Development Co Ltd (0034.HK) said China Examination
and Approval Authorities had approved its plan to buy assets from
China Orient -- in a deal to be settled either in cash or issue
of convertible bonds -- to set up a joint venture. The company
had revised down total capital investment in the joint venture to
5.38 billion yuan from 8.8 billion yuan. For full statement,
click
here

* Shangri-La Asia (0069.HK), the hotel arm of Malaysia's
Kuok Group, which has hotels and investment properties in China
and Hong Kong, said its yearly profit rose 68.6 percent to
$340.86 million, beating consensus forecast of $259.4 million.

* Financial plays such as HSBC (0005.HK), ICBC (1398.HK) and
Bank of China (3988.HK) will be in focus after Swiss bank UBS
(UBSN.VX) rattled investors with news of $19 billion in fresh
writedowns [ID:nL01419180]

FACTORS TO WATCH:
* Nikkei .N225 jumps over 3 pct as credit fears ease [.T]
* U.S. stocks- popular Lehman stock deal sparks Wall St rall [.N]
* STOCKS NEWS ASIA-Market factors, main events [STXNEWS/ASIA]
* Oil extends losses as dollar gains [O/R]
* Dollar rallies broadly as credit worries ease [USD/]
* For upcoming Hong Kong events, click on [HK/DIARY]
* For Hong Kong press digest, click on [PRESS/HK]

KEY HK ADR MOVERS (by % change)

Aluminum Corp (ACH.N)(2600.HK) +8.6

Sinopec (SNP.N)(0386.HK) +7.5

China Life (LFC.N)(2628.HK) +6.9

China Mobile (HK) (CHL.N)(0941.HK) +6.6

Yanzhou Coal (YZC.N)(1171.HK) +6.1
(US$1=HK$7.8)
(Reporting by Joseph Chaney)