Chinese banks soared on news of a bailout for Fannie Mae and Freddie Mac while trading firm Li and Fung jumped on Temasek's investment, sending Hong Kong shares sharply higher Monday.
Hong Kong's benchmark Hang Seng Index soared 860.99 points, or 4.3 percent, at 20,794.27 after trading between 20,637.99 and 20, 840.69.
Turnover rose to 68.41 billion HK dollars (8.81 billion U.S. dollars) from Friday's 65.27 billion HK dollars (8.37 billion U.S. dollars).
But analysts and traders said the rescue plan for the U.S. mortgage giants provides only short-term relief to the market and probably won't have much impact on the U.S. economy. They expect the Hang Seng Index to meet resistance at 21,000 points.
Heavyweight HSBC rose 5.5 percent to 123.70 HK dollars, China Mobile jumped 4.8 percent to 85.90 HK dollars, and PetroChina climbed 3.4 percent to 9.65 HK dollars.
Bank of China, which has the most Fannie and Freddie-related debt holdings among Chinese banks, rose 5.5 percent to 3.48 HK dollars.
Other Chinese banks that hold U.S. mortgage debt also rose. Industrial and Commercial Bank of China gained 3.7 percent to 5.28HK dollars, China Construction Bank added 3.3 percent to 6.20 HK dollars and Bank of Communications rose 5.3 percent to 8.92 HK dollars.
Li and Fung jumped 11 percent to 25.00 HK dollars, after Singapore's Temasek agreed to buy a 4.6 percent stake in the company for 497 million U.S. dollars, or 23.09 HK dollars a share.(7.8 HK dollars = 1 U.S. dollar)
Source: Xinhua
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