Hang Seng Index rebounds on Tuesday on bargain hunting

Hong Kong stocks rebound in a volatile session on Tuesday, on bargain hunting and a U.S. interest rate cut speculation, despite precipitous skids in the mainland stock markets.

Hang Seng Index, the benchmark, opened higher at 21,444.61 points in the morning session. After fluctuating between 20,572.92 and 21,467.18 points, the blue-chip Hang Seng Index rebounded 300 points, or 1.42% to close at 21,384.61, recovering some of Monday's 5% plunge. Mainboard turnover climbed to HK$114.18 billion (US$14.71 billion), up from Monday's HK$94.37 billion (US$12.16 billion).

Hang Seng China Enterprise Index, which tracks the overall performance of 43 Chinese mainland state-owned enterprises on Hong Kong Stock Exchange, edged up 37.74 points or 0.3% to 11,074.83 points.

Local property developers led Tuesday's blue-chip gains ahead of an expected interest cut with Hang Seng sub-index of property shares adding 3.24%. Cheung Kong (Holdings) Ltd<1>, one of Hong Kong's largest real-estate developers owned by business giant Li Ka Shing, increased 4.1% to HK$103.1. Sino Land Company Ltd<83> advanced 6.4% to HK$16.4. Hang Lung Properties<101> jumped 5.3% to HK$24.85.

The financial shares were the second biggest winners on Tuesday with Hang Seng finance sub-index leaping 1.62%. The market heavyweight HSBC Holdings Plc<5> gained 2% to close at HK$120.4 on bargain hunting.

Another market heavyweight, China Mobile<941>, the largest firm by capitalization in the Hong Kong market, also registered an increase of 2% to HK$104.5.

Alibaba.com<1688> was among the day's top losers, which dropped sharply 21% to HK$12.20, nearly down close to its lowest level since its debut in November.

Aluminum Corp of China Ltd (Chalco)<601600><2600>, the world's No. 4 aluminum producer, slid nearly 2% to HK$11.58, following it reported profit decline in 2007 amid high production costs.

Among the top blue chip losers, offshore oil specialist CNOOC Ltd<883> sank 4.6% to HK$10.9. Coal miner China Shenhua Energy shares<601088><1088> plunged 6.2% to HK$30.9.

Analysts said Tuesday's rally is a sign that the blue-chip index may bottom out soon following a 32% sag from its peak in October and the worsening U.S. credit crisis will continue to weigh heavily on the market's near-term outlook.