Hong Kong shares rose Wednesday, buoyed by gains made by index heavyweight HSBC and Wall Street's advance overnight.
The blue chip Hang Seng Index rose 69.51 points, or 0.34 percent, to 20,388.49.
But trader said gains in the Hang Seng Index in the near term will be limited, as investors remain wary over possible austerity measures China may take to prevent the economy from overheating.
"The Hang Seng Index is unlikely to break the resistance level of 20,500 this week due to lingering concerns about possible further economy-tightening measures in China," said Y.K. Chan, Strategist at Phillip Capital Management(HK) Ltd.
HSBC rose 0.8 percent to HK$145.40 due to a number of factors. Dubai International Capital LLC said Tuesday that it had made a substantial investment in the bank and Spanish property developer Metrovacesa said Monday it bought HSBC's Canary Wharf headquarters for 1.09 billion pounds.
Most blue chips ended higher, led by fashion retailer Esprit, which rose 3.98 percent to HK$99.30 on strength in the euro currency. The company receives most of its revenue from European markets.
But Chinese banks retreated, as China announced it will raise commercial banks' reserve requirement ratio another 0.5 percentage point to 11 percent from May 15.
ICBC fell 0.7 percent to HK$4.26, while China Construction bank dropped 0.42 percent to HK$4.76. Bank of China ended 0.5 percent lower at HK$3.86.
On the Net: