HK eyes a prosperous new year

HONG KONG shares opened their account for the new year on a bright note with market strategists saying they expected the good times to roll for some while.

Buoyed by expectations that economic growth is picking up and with China still booming, the Hang Seng index rose 172.47 points to 12,748.41.

Banks, often singled out as handy plays on such cyclical stories, led the gains. Lender HSBC, which also has a London listing, firmed HK$1.50 to HK$124. It was also aided by news it had been granted approval to issue jointly branded credit cards in China.

'We favour the banking sector mostly as a result of the improved macro [economic] outlook,' said Citigroup Smith Barney analyst YK Fu.

He cited faster economic growth, recovery in the city's critical property sector and the declining rate of bankruptcies as justifying higher prices for HSBC and its peers. Citigroup Smith Barney sees the lead index at 15,000 points, up about 17%.

Evidence of Hong Kong's continued recovery is not hard to come by. Today's contribution came with the monthly Purchasing Managers' Index survey, which showed that the economy grew for a seventh month in December.

The figure for December was 53.9 - a reading above 50 indicates expansion. That was down on November's 56.3 but still comfortably in positive territory.

Other banks were also ahead. Blue-chip Bank of China (Hong Kong) put on 15 cents to HK$14.75, Hang Seng Bank - part-held by HSBC - climbed 50 cents to HK$102.50 while Standard Chartered firmed 50 cents to HK$126.50.

Property counters, also seen benefiting from improving fundamentals, gained. Cheung Kong, the flagship of tycoon Li Ka-shing, climbed 75 cents to HK$62.50, while Sun Hung Kai Properties rose HK$1 to HK$62.25.

Singapore shares fared well on a similar set of factors to those in Hong Kong - a better economic environment and greater demand for hi-tech exports is seen lifting many shares, especially banks.

State-linked lender DBS picked up 30 cents, or 2%, to S$15 and Overseas Chinese Banking Corp was better by 10 cents at S$12.20. Contract chipmaker Chartered Semiconductor Manufacturing was among the best performers, up five cents, or 2.9%, to S$1.78. The Straits Times index traded at 1786.74, ahead by 22.22 points or 1.3%.

A rise of 24 cents, or 2%, for Rupert Murdoch's News Corp to A$12.23 dominated proceedings in Australia.

The media conglomerate, heavily exposed to the US, is seen benefiting from the hoped-for better conditions this year in the world's biggest economy.

The All Ordinaries index, which traded for only a half day, closed up 3.8 points at 3309.8. Mild profittaking pared back National Australia Bank by three cents to A$29.92.

Malaysia's national carmaker, Perusahaan Nasional Otomobil, also known as Proton, lost ground as investors reacted to a new tax structure for the industry. Import duties on rival models have been cut, while excise charges have risen. The stock dipped 10 cents to M$8.35.

In contrast to most of its regional counterparts, the Kuala Lumpur Composite index retreated 4.22 points to 789.72.

Japan's markets, the region's largest, remained closed for an extended New Year break and re-open on Monday.