Hong Kong, Shanghai shares up

Hong Kong stocks extended gains on Wednesday as a surge index heavyweight HSBC helped push the benchmark past some short-term technical resistance levels. China's key stock index closed 0.6 percent higher in thin volume, underpinned by strength in airline and property issues.
The Hang Seng Index closed 1.5 percent higher, bringing its gains since the start of the year to 4.7 percent. Shares of HSBC Holdings, known locally as the "big elephant" because of its mammoth 15 percent weighting on the benchmark index, rose 3.7 percent on over 4 times its average 30-day traded volume.
The bank's shares have underperformed the Hang Seng Index for two years in a row, with 2010's near 11 percent decline, falling short of a mild 5.3 percent advance for the index. Citigroup, which upgraded HSBC shares to "buy" from "hold", expects HSBC's new management to raise dividends in coming years and sees the bank as a key beneficiary in the development of the offshore yuan market.
In a sign that Beijing is increasingly promoting the use of the Chinese currency in major financial centres, Bank of China has offered yuan trading to US customers. Shares of the state-owned bank rose 1.7 percent. Meanwhile, energy counters rose for a second session, helped by a surge in oil prices that took US crude futures above $91 per barrel.
PetroChina Co Ltd rose 1.9 percent. CNOOC Ltd gained 1.6 percent, and refiner China Petroleum & Chemical Corp (Sinopec) rose 2.1 percent. The benchmark Shanghai Composite Index rose 0.6 percent to 2,821.3 points, extending a 0.4 percent rise on Tuesday.
It remains above the 125-day moving average, now at 2,771.8, a level, which is expected to provide support in the near term. Trading was lacklustre, with investors shying away from making big bets ahead of December economic data, including China's inflation, due on January 20 and ahead of the Lunar New Year holiday, which starts on February 2. Turnover hit a two-week low of 88 billion yuan ($13.3 billion). Analysts said low valuations of property companies attracted buyers.
Most of them expected these developers to show strong growth when they report 2010 earnings starting this month, despite periodic crackdowns on property speculation by Beijing last year. The property sub-index ended 1.3 percent higher. Gemdale, the fourth most active share on the Shanghai market, rose 0.8 percent, while Vanke, the country's biggest listed developer, inched up 0.4 percent.
Central bank Deputy Governor Yi Gang said in remarks published on Wednesday that China should focus on increasing domestic demand and re-balancing its economy rather than relying on monetary policy to fight inflation. Airlines also outperformed, with Southern Airlines Co gaining 3.1 percent after it predicted a sharp jump in 2010 profit, and on yuan appreciation ahead of a state visit by China's President Hu Jintao to the United States on January 18-21. Air China rose 2.5 percent, while Hainan Airline was up 1.8 percent.