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Thursday, April 2, 2015, 17:32

HK shares rise to 7-month high

By Agencies

Hong Kong's benchmark Hang Seng Index rose to seven-month highs on Thursday, while growth stocks soared on expectations of fresh money inflows from the Chinese mainland.

China has recently encouraged mainland mutual funds to buy Hong Kong shares and also expanded Chinese insurers' investment scope, allowing them to buy stocks listed on the Growth Enterprise Market (GEM).

GEM, home to high-growth, start-up companies, continued firm on Thursday, jumping more than 3 percent.

"Hong Kong stocks are cheap," said David Dai, Shanghai-based investment director at Nanhai Fund Management Co Ltd. "In the mainland market, it's not easy to pick stocks now."

Mainland small caps trade at around 100 times companies' earnings on average, compared with a price/earning ratio of about 10 for their Hong Kong peers, according to UBS strategist Lu Wenjie.

The Hang Seng Index rose 0.8 percent to 25,275.64, while the China Enterprises Index gained 1.0 percent to 12,663.12.

The Hong Kong market will be closed for a holiday from Friday to Tuesday, reopening on Wednesday. For the short trading week, the Hang Seng gained 3.2 percent, the biggest weekly rise in eight months.

Among the most actively traded stocks on Hong Kong's main board were GOME, up 5.9 percent to HK$1.25, SMIC, down 1.3 percent to HK$0.78, and ICBC, up 1.6 percent to HK$5.85.

Total trading volume of companies included in the HSI index was 2.2 billion shares.

Chinese mainland stocks also ended higher on Thursday, with the benchmark Shanghai Composite Index up 0.41 percent, or 15.49 points, to finish at 3,825.78 points.

The Shenzhen Component Index gained 0.23 percent, or 31.38 points, to close at 13,426.10 points.

Combined turnover on the two bourses expanded to 1.24 trillion yuan from the 1.13 trillion yuan on the previous trading day.

Nearly 140 shares increased by the daily limit of 10 percent, and more than 2,000 shares across the two boards posted handsome gains this trading day.

Shares related to home appliance, environmental protection, electric instruments and smart grid led the gains. Guanghzou-based Suofeiya Home Collection Co., Ltd. surged by the daily limit of 10 percent to end at 35.52 yuan per share. Beijing SPC Environment Protection Tech Co.,Ltd gained 9.38 percent to end at 39.55 yuan per share.

Heavyweight shares related to financial and property sectors extended the losing trend as investors expect their profits to suffer amid the downward trend of the Chinese economy.

China Merchants Securities lost 3.08 percent to close at 31.79 yuan per share, and Poly Real Estate Group Co., one of China's property heavyweights, went down 1.67 percent to end at 11.21 yuan per share.

Gao Xiang, chief financial advisor with CITIC Securities, expected more volatility on the future performance of the stock market over the upcoming round of initial public offerings (IPO) that will come after the annual Tomb-Sweeping Day, which falls on April 5 this year.  

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, increased by 2.93 percent, or 70.42 points, to end at 2,475.32 points.

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