Hong Kong shares turn higher on rate cut hopes, solid earnings

Hong Kong shares turn higher on rate cut hopes, solid earnings - UPDATE

	Published : Tue, 30 Oct 2007 04:03 By : Agencies Print this Story

HONG KONG (Thomson Financial) - Hong Kong shares turned higher in volatile trading Tuesday morning, with the Hang Seng Index hitting an all-time high on optimism that the Federal Reserve will cut interest rates.

Investors also bought after Wall Street extended its gains overnight and Hong Kong-listed companies reported solid earnings.

'Expectations that the Fed will cut interest rates will continue to push the market higher,' said Castor Pang, a strategist at Sun Hung Kai Financial.

At 10.44 am (0244 GMT), the Hang Seng Index was up 186.28 points or 0.6 percent at a record 31,762.98.

'The market will continue to be supported by liquidity from the mainland and other countries,' Pang said.

On Sept 18 the Fed cut interest rates by a deep 50 basis points, sparking a rally in global stock markets, including Hong Kong. Analysts expect the Fed to cut rates by another 25 basis points Wednesday.

China Petroleum & Chemical Corp (Sinopec) rose 6 Hong Kong cents or 0.5 percent to 11.74 dollars. Sinopec, Asia's biggest oil refiner, said Tuesday that its third-quarter net profit rose 8 percent to 13.8 billion yuan as higher oil prices and faster growth in China lifted revenue.

PetroChina was up 18 cents or 1.0 percent at 19.80 dollars. Asia's biggest oil company said it has priced its initial public offering of 4 billion A-shares in Shanghai at 16.70 yuan a share, the top end of the indicative range, allowing it to raise 66.8 billion yuan and so making this China's biggest IPO so far.

Aluminum Corp of China (Chalco) gained 40 cents or 1.7 percent at 23.35 dollars. Chalco, the country's biggest metal producer, said its net profit was 2.04 billion yuan in the third quarter and 8.4 billion yuan in the first nine months. It gave no comparative figures.

Bank of Communications (BoComm), China's fifth-biggest bank by assets, extended its gains, rising 20 cents or 1.4 percent to 14.44 dollars.

HSBC extended its gains into a second day. It was up 1.10 dollars or 0.7 percent at 151.10 dollars. On Monday HSBC said it has raised its stake in BoComm to 19.15 percent from 18.6 percent.

The mainland's three biggest banks were higher on expectations that the Chinese government will raise interest rates to cool the economy and curb lending. Industrial and Commercial Bank of China, the biggest, rose 2 cents or 0.3 percent to 7.27 dollars, Bank of China, the second-biggest, gained 2 cents or 0.4 percent at 4.85 dollars and China Construction Bank rose 24 cents or 3 percent to 8.51 dollars.

Higher interest rates in the mainland will boost earnings from lending and investments of the top three cash-rich banks. China has raised interest rate five times this year.

China Life Insurance was down 20 cents or 0.4 percent at 51.80 dollars. The mainland's biggest insurer said Monday that its net profit was 7.8 billion yuan in the third quarter, supported by higher investment income, and 24.7 billion yuan in the first nine months. It gave no comparative figures.

Shares of Sun Hung Kai Properties were suspended. Hong Kong's biggest developer said Tuesday it has agreed to sell 72.5 million shares for 150.75 dollars each, raising about 10.88 billion dollars.

'The deal has important implications for the soaring Hong Kong stock market because normally when big Hong Kong property developers tap the market for funds it means the market is approaching or is at its peak,' according to IFR Asia, a unit of Thomson Financial.

The stock will resume trading this afternoon.

(1 US dollar = 7.80 Hong Kong dollars, 7.47 yuan)

jun.ebias@thomson.com

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Hong Kong shares turn higher on rate cut hopes, solid earnings - UPDATE