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HK shares hit 9-month high with banks at the helm

Published 06/12/2009, 12:18 AM
Updated 06/12/2009, 12:24 AM
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(Updates to mid-morning)

HONG KONG, June 12 (Reuters) - Hong Kong shares rose for a third straight day on Friday, with the main index breaching the 19,000-point level for the first time in nine months, as data from U.S. and China strengthen the case for a likely turnaround in the global economy.

By 0350 GMT, the benchmark Hang Seng Index was up 0.9 percent at 18,955.26 after briefly touching 19,161.97, its highest level since September 25, 2008.

"Pushing the index above 19,000 points was crucial to creating the impression that this is a bull market," said DBS Vickers director Peter Lai.

"But at this level selling pressure is very high. Funds that bought into the market at 12,000-13,000 points have already begun to take profit," he said.

The China Enterprises Index of top mainland companies had risen 0.6 percent to 11,150.94.

Industrial stocks and metal counters were buoyed by data that showed China's May factory output rose more than forecast and retail sales growth accelerated.

Chinese bank stocks jumped after data showed mainland lenders issued 664.5 billion yuan ($97.3 billion) in new yuan loans in May, up from 592 billion yuan in April.

Yuan lending in the first five months totalled 5.84 trillion yuan, topping what the government had said was its minimum target of 5 trillion yuan for all of 2009 to support economic growth.

"Bank shares have lagged behind the rally in the last month. With more economic data coming out, investors are more reassured about a domestic-led recovery in China," said Alexander Lee, banking analyst with CIMB-GK.

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Top lender ICBC was up 1.8 percent at HK$5.19, while China Construction Bank (CCB) advanced 3.3 percent to HK$5.63. Both stocks moved in large volumes, making up 13 percent of total turnover on the exchange in early trade.

The loan data also supported strong gains in Chinese property counters with China Overseas Land climbing 6.2 percent and Guangzhou R&F Properties advancing 3.5 percent.

Global lender HSBC climbed 2.8 percent to move up to HK$69.40 on news that U.S. retail sales rose in May for the first time in three months and the number of workers filing new claims for jobless benefits last week hit a January low.

The stock was raised to an "outperform" rating from "neutral" by Credit Suisse on Thursday with a target price of HK$84, as it is seen to be less vulnerable to the margin pressure on European banks in the medium term.

The stock has lagged its peers and the broader index as it went into a tailspin ahead of its cash call in March. HSBC has edged up 2 percent since the beginning of the year, compared with the 32 percent rally on the Hang Seng Index.

(Reporting by Parvathy Ullatil; Editing by Chris Lewis)

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