Hong Kong stocks rose 0.26 percent in their fourth straight gaining session on Tuesday, finishing at their highest level in seven weeks, thanks to an improved interest rate outlook. In subdued trade before the US July 4 holiday, the benchmark Hang Seng index gained 42.32 points to end at 16,368.98.
Turnover was HK$22.1 billion (US $2.8 billion), down from Monday's HK$27.4 billion. Market watchers said that although sentiment was improving after the US central bank suggested last week it could pause in its rate-raising campaign, the prevailing mood was cautious.
"There's still a feeling that we're not out of the woods yet," said Matt McKeith, Head of Equity Dealing at First State Investments, noting that the recent momentum in commodity prices could again stoke inflation worries. "You want to see some firmness coming back with conviction," he said. "The feel of this week, post the Fed meeting, is pretty directionless," McKeith added.
The China Enterprises index of H-shares, or Hong Kong-listed shares in mainland companies, rose 0.33 percent to 6,814.56, as small- to mid-cap stocks took their turn in the spotlight.
"We saw the smaller cap H-share laggards pick up after focus had been on the large resource and financial shares," said Steven Cheng, associate director at Shenyin Wanguo.
China Shipping Development Co Ltd soared nearly 8 percent to HK$6.15 and Guangshen Railway Co Ltd raced up 1.7 percent to HK$2.95. Port plays also gained amid a positive valuation outlook, boosted by the recent interest in Associated British Ports, analysts said. China Merchants Holdings (International) Co Ltd jumped 3.9 percent to HK$25.50 and COSCO Pacific Ltd added 1.2 percent to HK$17.60.
Hong Kong's Cathay Pacific Airways gained 1.1 percent to HK$13.70 after saying it had applied for a quota for the Hong Kong-Shanghai route, aiming to resume a service it stopped offering 16 years ago. ZTE Corp slid 5.7 percent to HK$23.85 after China's second-largest telecoms equipment maker said it expected a decrease in net profit for the first half of 2006. Dongfeng Motor Group Co Ltd fell 2.1 percent to HK$3.50 amid May's inventory build-up, as cited by Citigroup in a research report.
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