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HK market surges on hopeful data

HONG Kong shares advanced 5.5 percent yesterday with huge turnover, sending the key index to its highest level since mid-October 2008, as data from China and the United States suggested the global economy was on the mend.

Coal and steel stocks rallied strongly after China's official purchasing manager's index for April rose for a fifth straight month, adding to evidence the country would make an early recovery from the global economic slump.

Turnover soared to a four-month high of HK$80.3 billion (US$10.4 billion) compared with HK$70.9 billion on Thursday.

"The trend is pretty clear, the market is going to gain much more unless there is a big scare like widespread H1N1 flu. But a pullback will be a great entry point for institutional funds, there is a lot more liquidity waiting to enter the market," said Steven Leung, sales director with UOB Kay Hian.

The benchmark Hang Seng Index ended 860.06 points higher at 16,381.05, after grazing 16,387.12, its highest level since October 15, 2008, earlier in yesterday's session.

Most investors shrugged off concern over a global swine flu pandemic even after Hong Kong's government on Friday confirmed the region's first case of the flu in a Mexican traveler and sealed off a hotel, quarantining 200 guests and 100 staff for seven days.

"The flu fears seem to be fading as the danger of it spreading seems to be lower now," said Castor Pang, strategist with Sun Hung Kai Financial. "On the other hand, we have China's PMI data, which seems to signal continued recovery for the economy, yet another reason to stay bullish."

The world's largest contract manufacturer of mobile phone handsets, Foxconn International Holdings tacked on another 17.8 percent to Friday's 19-percent rally after a landmark cross-strait telecom deal was struck between China Mobile and Taiwanese Far EasTone.

Expectations of further Chinese investments into Taiwanese companies sent shares in Taiwan's market soaring 6 percent yesterday.

Consumer goods exporter Li & Fung Ltd jumped 10.8 percent to HK$24.00, building on last week's gains, after the company said it expected to sign more outsourcing deals within months as cash-strapped retailers in the US looked to cut costs in the economic downturn.

The outsourcing deals in 2009 could be similar in size to the one the company signed with fashion retailer Liz Claiborne Inc in February, Li & Fung President Bruce Rockowitz told Reuters on April 28.

The China Enterprises Index of top mainland companies was up 6.1 percent at 9,641.91, tracking a 3.3-percent rally on the Shanghai Composite Index which closed at a nine-month high yesterday.


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