HK bulls pile into China shop

TWO months ago Chinese supermarket player Lianhua lit up

Today such faith was amply rewarded as Lianhua hit yet another record high after a promising set of first-half figures.

Shares in the Shanghai-based group, which were priced at listing at HK$3.87, rose 40 cents to HK$5.35, up 8%. That took their advance over the past eight weeks to almost 40%. The latest fillip came from a 55% jump in first-half net earnings to 85.12m yuan (£6.5m).

The company, which typifies the type of business that lures investors excited by the potential of China's fast-growing economy, now has a market capitalisation of about HK$922m (£75m).

Lianhua has won plaudits for its domestic strategy, and attempts to forge more meaningful tie-ups overseas. It cooperates with Carrefour, Europe's largest retailer, in Shanghai, and has also looked to Europe itself. Lianhua has sent a team to Belgium to lead a cautious expansion plan. Executives said last month that it wanted to sell its own range of products to European consumers and source Western products to line its shelves in China. 'We should get a licence for an office in one to two months, and for a supermarket perhaps before the end of this year,' a spokesman said then.

The wider market was little changed in the run-up to interims from conglomerate Hutchison Whampoa and affiliate developer Cheung Kong, due after the close of trade. Hutch, flagship for tycoon Li Ka-shing and the driving force behind Britain's third-generation phone venture 3UK, rose 50 cents or 0.9% to HK$54.75. Cheung Kong gained 25 cents or 0.5%, also at HK$54.75. The 33-member Hang Seng index rose 30.45 points to 10,505.78.

Global lender HSBC, which went ex-divided earlier this week, traded level at HK$99.50. Property stocks gained on expectations of better growth next year as the economy picks up. Henderson Land Development added 65 cents or 2.4% to HK$27.90.

In Japan stocks climbed amid continued enthusiasm for steel plays. Brokers say the well-established story of rising local demand and booming sales to China was still drawing buyers.

JFE Holdings, the country's second-largest steelmaker by market capitalisation, was 130 yen higher at 2550, stronger by 5.4%.

Nikko Citigroup started coverage of JFE with an outperform rating, predicting operating margins above 10% and record profits. The price target was 2900 yen. Nippon Steel was up nine yen at 221 yen. Nikko Citigroup was similarly bullish, laying down a target of 250 yen. The Nikkei 255 rose 70.63 points to close at 10,362.69. The broader-based Topix index continued its drive above 1000 points, adding 3.78 points to 1004.86.

Australia's troubled life insurer and fund manager AMP slipped 13 cents or 2.8% to A$4.48 after revealing interims marred by writedowns on its UK businesses. Brokers said doubts remained about its demerger plans, despite assurances from the company. The All Ordinaries index rose 2.2 points to 3169.9.

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