Hong Kong shares close higher led by properties

HONG KONG, Dec 21, 2007 (AFP) - Hong Kong share prices closed 2.26 percent higher Friday led by the property sector as housing sales are expected to remain strong next year, dealers said.

They said investors shrugged off China's latest interest rate hike as the move had been well anticipated, while also noting that the increase in the key lending rate was milder than expected.

China's central bank announced Thursday that it is raising the benchmark one-year lending rate by 18 basis points and the one-year deposit rate by 27 basis points, in its sixth rate hike this year.

Turnover remained low ahead of holidays. The market will have a half-day session on Monday and will be shut on Tuesday and Wednesday for Christmas.

The Hang Seng index closed up 609.83 points at 27,626.92, off a low of 27,192.80 and a high of 27,670.31. Turnover was 83.37 billion Hong Kong dollars (10.70 billion US). For the week, the index was up 63 points or 0.23 percent.

"Scores of investors were speculating that the US Federal Reserve will cut interest rates further as the US subprime mess continues to take its toll on major banks and causes worries over the state of the economy," said Peter Lai, sales director at DBS Vickers.

"This speculation, coupled with a positive outlook for the local housing market, fuelled fresh interest in properties," he said.

Properties posted sharp gains, with the sectoral sub-index surging 1,482.73 points or 4.19 percent at 36,904.30.

Cheung Kong rose 6.00 at 140.60, Henderson Land gained 1.75 at 70.55, Sun Hung Kai Properties was up 6.50 at 160.20 and New World rose 1.30 at 27.10.

Among large-caps, China Mobile gained 3.00 at 137.80, HSBC was up 1.10 at 132.20, Hong Kong Exchanges rose 3.80 at 220.80 and Hutchison Whampoa was up 0.40 at 87.80.

Lai noted that China's latest interest rate increase did not have any adverse impact on sentiment towards China properties and financials.

"This rate hike has already been factored in and the fact that it came yesterday removed an overhang on H-shares," he said.

China Construction Bank was up 0.02 at 6.68, China Merchants Bank rose 0.30 to 31.85, ICBC was up 0.14 at 5.72 and Bank of Communications was up 0.18 at 10.98.

Among local banks, Hang Seng Bank surged 6.00 at 158.60, Bank of East Asia was up 2.30 at 51.40 and BOC Hong Kong rose 1.10 at 21.55.

China National Materials, also known as Sinoma, added another 1.42 or 23.39 percent to 7.49 after a making strong debut Thursday.

The Hang Seng China Enterprises index ended up 249.03 points or 1.58 percent at 15,981.81.