Hong Kong stocks were largely unchanged on Friday as investors paused for breath after the benchmark index tapped fresh 4-year highs and hugged a key psychological level. But traders expect the market to continue climbing next week with healthy volume and a strong economic outlook fuelling further gains.
"This level is very encouraging. The market should have fallen on profit taking but turnover is very good and there is also a lot of momentum," said Peter Lai, a director at DBS Vickers. Investors said the market looked set to leap ahead thanks to a strong lead from US markets, which have been boosted by strong corporate earnings reports and market friendly economic data.
The market has largely shrugged off worries about further local interest rate hikes and is now looking ahead to the upcoming earnings season with strong reports expected from property firms and conglomerates in particular.
Lau expects blue chips to continue to outperform but expects China enterprise stocks to suffer from weak results due to a margin squeze on higher oil and commodity prices.
The blue chip Hang Seng Index ended up 0.09 percent, or 12.75 points, at 14,504.29.
The index gained 3.9 percent over the course of the week, making it the top performing major Asian bourse.
Volume was heavy with HK $26 billion ($3.3 billion) worth of shares changing hands.
Traders said resurgent talk that China may be set to revalue its yuan would also support the stock market.
Ports and container leasing firm COSCO Pacific was the top blue chip performer, rising 2.33 percent to HK $15.40.
The shares have recently lagged on worries about a slowdown in global shipping.
Bank of China's Hong Kong arm Bank of China (Hong Kong) and the city's largest lender HSBC Holdings Plc were the most actively traded stocks.
BOC gained 1.7 percent to HK $15.15 and HSBC rose 0.16 percent to HK $126 as investors chased financial stocks after a sharp run up in property stocks and ports-to-telecom firm Hutchison Whampoa Ltd.
Global casual wear retailer Esprit Holdings, the top blue chip performer of 2004, also played catch up after a weak start to the week on a broker downgrade. Esprit gained 1.2 percent to HK $54.60.
China's top offshore oil producer, CNOOC Ltd, was the top blue chip loser, extending Thursday's losses, down 4.1 percent to HK $4.67 on uncertainty over the outcome of its high-profile take-over bid for Unocal.
Investors worry CNOOC may become embroiled in a costly bidding war with Chevron Corp for Unocal.
CNOOC shares have gained 16 percent over the past month with investors initially keen on CNOOC's take-over bid.
Property shares were largely higher with Cheung Kong (Holdings) staging a late rally to end the session up 2.1 percent to HK $82.45, its highest level since 2001.
Mid-tier firm Hysan Development also tapped its highest levels since 1997, up 2.6 percent to HK $17.65.
Investors anticipate strong property firm earnings in August along with continued strong demand for commercial property amid a supply crunch. China enterprise shares were largely lower with the China enterprise stocks index down 0.5 percent to 4,865.83.
Shares in China Eastern Airlines Corp Ltd, one of China's top three carriers, shed 0.8 to HK $1.22 after the firm said it could report a significant loss for its first half.
Chinese power producer Huaneng Power fell 0.9 percent to HK $5.45 after it said it expects first-half net profit to fall 30-40 percent from same period last year, citing substantially higher fuel costs.
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