Summary Among other firms insurance giant AIA jumped 3.97 percent to HK$52.35
HONG KONG (AFP) - Hong Kong stocks rallied almost two percent on Friday following a record close on Wall Street and on speculation authorities will soon announce a tie-up between the city s index and Shenzhen.
The benchmark Hang Seng Index rose 1.96 percent, or 535.73 points, to 27,822.28 on turnover of HK$137.82 billion (US$17.78 billion). However, Shanghai fell 1.59 percent.
Friday s advance topped a positive week for the index, which was given a strong start by news at the weekend that China s central bank had cut interest rates for the third time in six months.
The HSI jumped in the afternoon as talk spread around the market that there could be a possible announcement this weekend about setting up a link similar to that between Hong Kong and Shanghai that allows a limited amount of cross border trading.
"There are some market talks that the Hong Kong Stock Exchange will announce details on the Shenzhen connect this weekend, with the starting date being in September," Yen Chiu, a Hong Kong-based trader at Shenwan Hongyuan Group, told Bloomberg News.
"The rally seems to be speculation-driven for now."
While the Hong Kong-Shanghai stock connect had a tepid start, it took off at the start of April when Chinese authorities lifted some restrictions on mainland investors, allowing them to plough billions of dollars into the southern city.
Traders in Shanghai took the opportunity to flood Hong Kong with cash after a year-long rally at home saw the index more than double in size. Hong Kong rose around 15 percent in the space of a month.
Hong Kong Exchange and Clearing surged 5.00 percent to HK$289.60. The firm s stock has risen almost 50 percent since the mainland cash started flowing in.
- IPO fears hit Shanghai -
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Among other firms insurance giant AIA jumped 3.97 percent to HK$52.35, China Mobile gained 3.61 percent to HK$109.00 and HSBC put on 1.14 percent to HK$75.65.
Sino Land was up 2.19 percent at HK$14.02 but Lenovo fell 1.75 percent to HK$13.48 and Kunlun Energy lost 1.41 percent to end at HK$9.12.
In mainland China the benchmark Shanghai Composite Index fell 1.59 percent, or 69.62 points, to 4,308.69 on turnover of 666.0 billion yuan ($109.0 billion).
The Shenzhen Composite Index, which tracks stocks on China s second exchange, lost 0.47 percent, or 11.44 points, to 2,442.76 on turnover of 640.3 billion yuan.
Traders took their cash off the table on fears over liquidity as 20 companies plan to issue new shares next week, after China s market regulator approved their initial public offerings (IPOs).
"The IPOs will drain funds away from the market, as investors usually pull funds out in advance to prepare for the new share issues," Haitong Securities analyst Zhang Qi told AFP.
"At the moment, market sentiment is weak. China has just cut interest rates on Sunday and it s unlikely they will do so again right away," he said.
Heavyweight financial stocks lost ground. In Shanghai, China Construction Bank fell 2.58 percent to 6.43 yuan, China New Life Insurance slipped 4.86 percent to 60.30 yuan and Citic Securities sank 3.35 percent to 31.98 yuan.
The country s two oil giants fell in Shanghai. PetroChina lost 2.89 percent to 12.11 yuan, while Sinopec retreated 3.94 percent to 7.31 yuan.
But new listing Shanghai Hile Bio-Technology surged 44 percent -- the maximum allowed for new listings -- to 9.81 yuan in Shanghai.
