)--Hong Kong shares ended higher Monday, led by coal companies after Yanzhou Coal reported strong third-quarter earnings, and oil companies due to higher oil prices.

The blue-chip Hang Seng Index rose 110.37 points, or 0.47%, to 23,627.91 after trading between 23,519.16 and 23,781.88.

Market volume rose to HK$85.70 billion from HK$84.03 billion Friday.

Analysts said they expect the Hang Seng Index to rise further this week and to hit 25,000 by the end of the year, underpinned by abundant liquidity.

Core Pacific-Yamaichi Research Director Belle Liang said she expects the benchmark index to trade between 23,300 and 24,000 this week, because faster yuan appreciation and another round of quantitative easing in the U.S., will continue to support fund flows to equity markets in the medium term.

'A beginning of the rate hike cycle (in China) would signal policy makers' confidence in an economic up-cycle and would not put an end to the bull equity markets, based on experiences in the past, as well as the experience of rate hikes this year in both India and Taiwan,' she wrote in a report.

Chinese thermal coal companies led Monday's gains after Shandong province-based Yanzhou Coal said Friday its third-quarter net profit soared to CNY3.68 billion from CNY1.12 billion a year earlier, and it expects its full-year net profit to double.

The company's stock jumped 11% Monday to HK$24.10. Shenhua Energy surged 3.6% to HK$36.20 and China Coal rose 3.8% to HK$14.86.

HSBC raised its target price on Yanzhou Coal to HK$25.60 from HK$21.50 on expectations of strong coal prices.

'We expect Chinese coal prices to rise in the seasonally strong 4Q but any rises are likely to be small unless the weather turns particularly cold,' HSBC research analyst Sarah Mak said in a research note Monday.

Oil companies also rose because of strong crude prices. Cnooc advanced 1.3% to HK$16.14 and PetroChina rose 1.7% to HK$9.93.

At 0830 GMT Monday, Nymex crude oil for December delivery was up US$1.23 at US$82.92.

Bourse operator Hong Kong Exchanges jumped 4.9% to HK$181.90 after Singapore Exchange's multi-billion-dollar takeover bid for the operator of Australia's securities exchange prompted a wave of merger interest.

Hong Kong shares ended lower Friday after several blue-chip firms reported weaker-than-expected quarterly results, but market volume got a boost from the strong investor interest in AIA Group, which surged in its much-anticipated debut.

The Hang Seng Index fell 114.54 points, or 0.5%, to 23,096.32, after falling as low as 22,880.68. The index declined 1.8% this week, extending its 1.0% loss last week, which had ended seven weeks of gains that started Sept. 1.

Market volume spiked to HK$135.93 billion from HK$76.06 billion Thursday, with trade in AIA's shares contributing HK$49.39 billion, or 36.3% of the total.

Analysts said they expect the index to consolidate more in the coming few sessions, but further declines will provide opportunities to take positions for a likely year-end rally.

'(At today's intraday low), the Hang Seng Index has corrected about 1,000 points from the peak of the latest rally at 23,866 (hit Oct. 14), which probably is not enough. But another 500-point fall should present a chance to get in,' said Francis Lun, general manager at Fulbright Securities.

The biggest story Friday was Pan-Asian life insurer AIA, which surged as much as 18% before ending the session up 17% at HK$23.05.

'AIA is the only leading life insurer that will be listed, based in, established throughout and exclusively focused on Asia Pacific,' SHK Financial wrote in a research note.

Lun said: 'AIA is trading at about 1.2 times embedded value, much cheaper than China insurers such as China Life, which has a price to embedded value that is more than double AIA's.'

Bank of Communications tumbled 7.8% to HK$8.47 after it reported Thursday its third-quarter net profit rose 24% to CNY9.18 billion, below the average CNY9.7 billion analysts had expected.

China Life fell 3.0% to HK$33.95 after it said its third-quarter net profit rose 3.4% to CNY6.91 billion, and Esprit ended 2.0% lower at HK$41.75 after it reported a 9.1% drop in revenue for the three months ended Sept. 30 as its wholesale business continued to struggle.

These three firms accounted for 54.06 points, or nearly half, of the Hang Seng Index's 114.54-point drop.

The Hong Kong market's two-week correction comes ahead of a U.S. Federal Reserve meeting next week that could provide details on the size and scope of a widely expected new round of quantitative easing.

'Investors are concerned about the size of 'QE2,' which will serve as an indicator of future liquidity flows into Hong Kong market,' says Conita Hung, a director at Delta Asia Financial.

Hung said she expects a year-end rally that could take the Hang Seng Index as high as 25,000.

China Construction Bank led banking sector gains Tuesday as investors welcomed the lender's smaller-than-expected rights issue plan, helping send Hong Kong's benchmark index higher, though its rise was capped after Australia's surprise interest rate hike as well as caution ahead of the U.S. Federal Reserve's interest rate decision this week.

The blue-chip Hang Seng Index rose 18.48 points, or 0.1%, to 23,671.42 after rising as high as 23,724.87 during the session. Market volume totaled HK$76.22 billion, down from HK$91.05 billion Monday.

Analysts said the blue-chip index will likely trade between 23,000 and 23,800 points in the next few sessions, though they expect the index to reach 24,000 next week if the second round of U.S. quantitative easing measures are within market expectations.

'Depending on the timing and size of QE2 (,the proposed second round of quantitative easing), more hot money may move to riskier assets such as equities,' said Jackson Wong, investment manager at Tanrich Securities.

He said he remains optimistic about Hong Kong's property and financial sectors, lifted by continued liquidity inflows, but noted that investors should be careful of a correction in gold and resources firms after their earlier sharp gains.

The local market's gains were limited in part by the surprise decision Tuesday by the Reserve Bank of Australia to raise the overnight cash rate by 25 basis points to 4.75%, in a move to stave off looming inflation pressures. The rate hike sparked concerns about overheating growth in other Asia-Pacific economies, analysts say.

Still, Taifook Securities said in a note Tuesday that it believes the local Hong Kong investment environment 'continues to be enviable,' as valuations are not demanding with solid corporate earnings growth. On the macro front, robust investment and consumption confidence have been further propelled by liquidity inflows, the brokerage said.

China Construction Bank was among the day's biggest blue-chip gainers, after the Beijing-based lender unveiled plans to raise up to CNY61.62 billion in a rights issue in Hong Kong and Shanghai. The amount was lower than the CNY75 billion it earlier said it hoped to raise, helping fuel the stock's gains. It ended 2.2% higher at HK$7.81.

Among other Chinese banks, ICBC rose 1.3% to HK$6.40, Bank of China also rose 1.3% to HK$4.85, and Bank of Communications gained 0.9% to HK$8.57.

Ports investor Cosco Pacific also rose, after the company said it expects its 2010 port-handling volume to surpass the pre-crisis peak in 2008.

Cosco Pacific Deputy Managing Director Kelvin Wong told Dow Jones Newswires that the company expects to see sustained throughput growth at its container terminals next year following a strong 2010, supported by robust demand for international trade as the U.S. and European economies recover, as well as increasing contributions from new port projects.

Cosco Pacific ended up 1.2% higher at HK$12.56, its highest closing level in nearly seven months, after earlier surging to a high of HK$12.72. The stock last ended above Tuesday's closing level on April 12, when it ended at HK$12.64.

Hong Kong shares ended higher Friday, led by financial firms after their peers in the U.S. rose on news the Federal Reserve will soon allow healthy banks to increase dividend payments for the first time since the financial crisis.

The blue-chip Hang Seng Index rose 341.19 points, or 1.4%, to 24,876.82 after trading between 24,732.90 and 24,931.85 during the session.

Market volume rose to HK$133.81 billion, from HK$120.12 billion Thursday. It was the third highest trading volume this year.

Daniel So, an analyst at Sun Hung Kai Financial, forecasts the index to test 25,000 soon and hit 26,300 by the end of 2010. 'I think the trading sentiment will remain strong for the rest of the year, given ample liquidity in the market.'

Others were more cautious given the recent sharp rally, with the blue-chip index up 7.7% over the past five sessions. Core Pacific-Yamaichi said in a report it expects some consolidation in equities and suggested short-term investors buy shares on corrections.

HSBC led financial firms higher, tracking peers in the U.S., after people familiar with the matter said U.S. regulators are expected to give guidance as soon as next week outlining the standards banks must meet to increase dividend payments. Many U.S. banks want to boost payments to shareholders, citing improved profits, because they have long relied on a steady stream of dividends to attract investors. But they have had to wait as regulators across the globe worked on new rules requiring banks to hold more capital as a buffer against future losses.

'The relaxation of regulations in the U.S. sends a very good signal to international financial firms,' said Jackson Wong, investment manager at Tanrich Securities.

The Standard & Poor's 500-stock index rose 1.93% to 1221.05 in the U.S. on Thursday, with the financial sector leading. The Dow Jones Industrial Average closed up 1.96% at 11434.84, its highest closing level since just before Lehman Brothers collapsed, with Bank of America and J.P. Morgan fueling the rise.

In Hong Kong, HSBC rose 3.1% to HK$88.15, accounting for 108.22 points of the benchmark index's gains. The firm's shares were also boosted by news the bank sold its train rolling stock unit for GBP2.1 billion.

Manulife Financial rose 8.9% to HK$108.40 and BOC Hong Kong was up 2.9% at HK$26.75.

Hang Lung Properties fell 6.5% to HK$37.70 after saying Friday it will raise HK$10.90 billion (US$1.41 billion) from a share sale to fund its expansion in China.

The blue-chip developer said in a statement it is offering a total of 293.9 million new shares at HK$37.48 each, representing a discount of 7% to its closing share price Thursday of HK$40.30. DBS Vickers wrote in a report: 'We do not anticipate Hang Lung Properties' placement to trigger any immediate wave of fund raising activities for the property developer sector

@Chief Pkoli,
I know you are aware that events in HNK market is a reflection of what is happpening in US specifically the DJIA index.

Currently Hang Seng index has crossed the 24,000 mark it is expected to cross 26,000 before year end before it eases for a major market correction early 2011.

Just like in NSE, Hong Kong / China market has been a good year for me as I recorded stellar performance in commodity (Gold /Metals) and Energy (Oil) stock which is my area of specialisation.. I think that is the most important thing bearing in mind that my reference point or benchmark is the gold /oil price in the spot market.

Oil was circa 46 USD at the begining of the year and it is now 86 USD. Gold started within 1,100 USD an ounce and it is currently above 1,300 USD. All these translates to great gains. on the respective equities. This is not only applicable to Hong Kong, but also resources stocks in Canada, Australia, south Africa and US
.
Hong Kong is just one of eseveral markets I invest in, it is just that I am focussing on it in the past few months in my column.