HONG Kong stocks rose for the fifth time in six days yesterday, led by Chinese mainland banks after earnings from China Construction Bank Corp boosted expectations that industry profits will increase.
According to Bloomberg News, Construction Bank, the nation's second-biggest bank by market value, and Bank of Communications Co, part-owned by HSBC Holdings Plc, closed at their highest in four months.
"Domestic banks are in such positions that they are dominant players facing not very fierce competition," said Pauline Dan, the chief investment officer at Samsung Investment Management Hong Kong Ltd. "The underlying demand is strong."
The Hang Seng Index added 149.51, or 0.6 percent, to 25,666.29. Finance-related companies including banks accounted for 46 percent of the advance. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese mainland companies, fell 0.2 percent to 14,196.66.
The main Hang Seng benchmark is still down 7.7 percent this year amid mounting global credit-market losses and concern that Chinese measures to curb inflation running at close to the highest in 11 years will dent profits there.
Construction Bank added 15 cents, or 2.2 percent, to HK$6.91 (89 US cents), its highest close since December 24. Bank of Communications climbed 16 cents, or 1.4 percent, to HK$11.30, its best close since December 13.
Construction Bank reported first-quarter profit of 32.1 billion yuan (US$4.58 billion) as lending margins expanded and demand for loans and asset management services grew, according to an April 25 statement. The first-quarter earnings alone almost overhauled the 34.2 billion yuan that the bank reported in profit for the first six months of 2007.
Chinese bank shares listed in Hong Kong have outperformed the Hang Seng Index in April as lenders including China Merchants Bank Co and China Minsheng Banking Corp reported first-quarter earnings that doubled from a year earlier.
China Life Insurance Co fell 55 cents, or 1.6 percent, to HK$33.25, its biggest drop since April 14.