Hong Kong stocks open higher, China plays surge
HONG KONG, Nov 3 (Reuters) - Hong Kong stocks opened sharply up on Tuesday, boosted by overnight gains on Wall Street which helped send the Hang Seng Index surging to a new five-month high of 10,392, up 222 points, or 2.19 percent in early trade.
''The New York market was higher overnight and market sentiment has improved amid an easier global interest rate trend, and the risk of a recession in the United States seems to be minimal,'' said Michael Ng, deputy managing director at Sassoon Securities.
The Dow industrials rose 114.05 points, or 1.33 percent, to close at 8,706.15 on Monday.
Brokers said the market was partly boosted by the strength of red chips and H shares, with investors looking for laggards.
The Hang Seng China-Affiliated Corporations Index added 59 points, or 5.86 percent, to 1,070 points and the H-share index soared 19 points, or 4.35 percent, to 458 points.
''Blue chips looked pretty expensive at these price levels and small investors gradually turned to red chips and H-shares which dropped more than the market earlier this year,'' Ng said.
Recent asset acquisitions made by red chip companies, and the International Finance Corporation's (IFC) decision to include red chips in its emerging markets index, focused people's attention on the sector, brokers said.
The IFC said it would add Hong Kong's red chips to its investable and global index series for China on Monday, boosting China's weighting in its IFCI Asia index to 10.7 percent from 2.4 percent and in the IFCI Composite index to 2.65 percent from 0.59 percent.
China Everbright surged HK$0.325, or 9.29 percent, to HK$3.825, boosted by news on Monday that the company would acquire all of China Everbright Financial Holdings Ltd from its parent company, China Everbright Group Ltd, for HK$700 million.
Shanghai Industrial surged HK$2.10, or 10.88 percent, to HK$21.40.
''Foreign funds are seen flowing into the Hong Kong market and they are looking for laggards,'' said Alex Tang research director at Core Pacific - Yamaichi International (HK).
Active buying for HSBC Holdings lifted the stock up HK$6.00 to HK$183.50.
Other blue chips were mostly a touch firmer but buying was relatively slow, brokers said.
The overall market turnover was HK$4.00 billion in the first hour of trade.
''Small investors and funds are all eager to buy, especially fund managers who have a high level of cash holdings, while the year-end reporting season is approaching,'' Tang said.
November index futures rose 130 points to 10,320 points at mid-morning.
Tang said the Hang Seng Index probably could move up to 12,000 points by the end of the year.
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