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By Rita Chang
HONG KONG, Feb 19 (Reuters) - Hong Kong stocks rose 1.5
percent in thin trade on Tuesday, tracking strong Asian markets,
as Bank of China (3988.HK) surged after its chairman said it had
set aside enough provisions to cover its exposure to subprime
credit.
Outperforming Chinese financials and advancing resource
shares backed by strong commodity prices pushed Hong Kong-listed
shares in mainland companies to their highest close in two weeks.
Investors shrugged off China's report that its annual
consumer price inflation surged to 7.1 percent in January, the
highest in more than 11 years [ID:nBJB000026], on the heels of
fierce winter weather.
"Investors believe that the Chinese government will not raise
rates in the near term after the bad weather," said Patrick Shum,
strategist at Karl-Thomson Securities.
The benchmark Hang Seng Index .HSI closed up 363.92 points
at 24,123.17. The China Enterprises index of H shares .HSCE, or
Hong Kong-listed shares in mainland companies, gained 2.5
percent, or 342.69 points, to end at 13,972.94.
For now, analysts said the market would continue to drift
within a range, with 25,000 seen as the resistance level.
"We're still directionless," said Daniel Chan, senior
investment strategist at DBS Bank. "Every day, every week, the
credit crunch continues. If the U.S. continues to be under
pressure from subprime, Hong Kong will be under pressure."
Mainboard turnover was HK$78.8 billion (US$10.1 billion),
nearly even with Monday's HK$78.1 billion.
FINANCIALS SURGE
Bank of China was the day's most active stock and top blue
chip gainer, up 7.8 percent at HK$3.3. Bank of China Chairman
Xiao Gang also said the Chinese lender would report marked profit
growth for 2007.
Industrial and Commercial Bank of China Ltd (1398.HK) vaulted
3.5 percent to HK$5.38. The country's top lender said on Monday
its non-performing loan ratio had dropped further in 2007 due to
enhanced risk controls [ID:nPEK353243]. Bank of Communications
(3328.HK) gained 4.7 percent to HK$9.74.
China Life (2628.HK) advanced 2.8 percent to HK$31.15 and
Ping An Insurance (2318.HK) surged 3.6 percent to HK$59.45.
British lender HSBC Holdings plc (0005.HK) tracked its
London-listed shares (HSBA.L) higher, climbing 1.6 percent to
HK$114.4 after declining sharply for two straight days. Banks had
led a gain in London's FTSE 100 .FTSE on hopes of higher
dividends and after the government decided to nationalise
stricken lender Northern Rock NRK.L.
Strong commodity prices, led by platinum's rise to a record
high, kept resource shares on a winning streak. China Molybdenum
Co (3993.HK), producer of a key steel input, shot up 5.6 percent
to HK$11 and Angang Steel (0347.HK) leapt 6.2 percent to
HK$18.62. The price of steel is set to rise after producers
agreed to pay more for iron ore.
Nickel miner Xinxin Mining (3833.HK) soared 12.4 percent to
HK$6.54.
Sun Hung Kai Properties (0016.HK) edged up 0.4 percent to
HK$140. The city's top developer said its chairman and chief
executive Walter Kwok would take temporary leave immediately, a
move that Standard & Poor's said would have no rating impact.
(US$1=HK$7.8)
(Editing by Edmund Klamann)
