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Hong Kong's benchmark index rises 1.5 percent on overnight gains in Europe

Hong Kong's benchmark index rises 1.5 percent on overnight gains in Europe

Hong Kong stocks rebounded Tuesday, as investors took heart from overnight gains in Europe and on news that Bank of China put aside enough provisions at the end of last year to cover all of its subprime debts.
The Hang Seng Index gained 363.92 points, or 1.53 percent, to 24,123.17, after earlier rising more than 2.6 percent. The index lost 1.6 percent on Monday, after adding nearly 7 percent over the previous four sessions.
Bank of China was the top blue-chip performer, rising 7.8 percent to HK$3.30 after its chairman, Xiao Gang, said the bank wrote off all its subprime collateralized debt obligations at the end of last year, Dow Jones Newswires reported.
Xiao told reporters late Monday he believes the bank set aside enough provisions at the end of December for its exposure to the subprime crisis.
Xiao's comments also helped drive other Hong Kong-listed Chinese banks sharply higher. Bank of Communications added 4.7 percent to HK$9.74. Industrial & Commercial Bank of China rose 3.5 percent to HK$5.38. China Construction Bank gained 3.3 percent to HK$5.93.
"The comments seem to show that the subprime-related problems are now behind Bank of China, which is very good news," said Peter Lai, a director at DBS Vickers. "Investors are betting today that other Chinese banks have resolved their subprime problems as well."
Lai said that while Hong Kong's benchmark index will likely continue to fluctuate "widely and wildly" in the near term, he said investors can consider accumulating Chinese consumer and infrastructure stocks for the medium term.
"The recent snow storms showed that China has more to do in developing its infrastructure, which in turn will benefit listed companies in the sector," he said.
Property stocks _ which have been an attractive buy in Hong Kong since the U.S. Federal Reserve started slashing interest rates late last year to stimulate the moribund economy _ were also among the top performers. The Hong Kong currency is pegged to the U.S. dollar and local banks usually match the U.S. rate cuts, making it cheaper to take out a loan to buy a property.
Sun Hung Kai Properties rose 0.43 percent at HK$140. New World Development gained 1.45 percent to HK$21.05. Hang Lung Properties was up 2.24 percent at HK$31.95. Cheung Kong dropped 0.66 percent to HK$120.10.
Other gainers included Standard Chartered, which rose 2.53 percent to HK$243., mainly tracking a 5.8 percent increase in the bank's London stock overnight.
European markets were lifted by gains in banking stocks after the British government said it would nationalize troubled lender Northern Rock until it can find a buyer, and Qatar said it had money to invest in the sector.
The U.K.'s benchmark FTSE 100 rose 1.8 percent to 5,893.6. Germany's Dax Index gained 1.5 percent to 6,932.61.
Markets in the U.S. were closed Monday for a holiday.


Updated : 2021-10-27 03:30 GMT+08:00