HK stocks closed up 0.5%, post third weekly gain

Hong Kong stocks hovered briefly at a 2011 high on Friday, with institutional investors expected to keep increasing their exposure based on attractive valuations and demand for materials.
The benchmark Hang Seng Index ended up 0.47% at 21,396.07, climbing 2.8% on the week and marking its third consecutive weekly gain.
The China Enterprises Index closed up 0.04% at 13,652.92, advancing 3.7% on the week.
The Shanghai Composite Index finished up 0.74% at 3,030.02, a 2011 high. The index rose 2.1% on the week. Selective buying in metal and steel companies kept the index above the key 3,000-point level.
China Unicom (Hong Kong) Ltd led gains on the benchmark, closing up 6.5% on favorable growth prospects in its 3G business. Analysts said there was some rotational buying within the telecommunications sector on Friday, with investors buying Unicom and selling its more established peer China Mobile Ltd , which edged down 0.3%. China Unicom ended the day technically overbought, with a relative strength index (RSI) value of 77.5.
Several analysts expect China Mobile and HSBC Holdings Plc to lead a broad rally on the Hang Seng next week, in part due to their strong weight in the benchmark, but suggested that other big banks and resources plays might lend support.
HSBC is trading in Hong Kong at a 12-month forward price-to-earnings ratio of 10.7 times, below the 10-year average valuation of 13.1 times, Thomson Reuters I/B/E/S data showed. China Mobile is trading at 10.1 times, lower than its average valuation over the past decade of 12.6 times.
The next target for the Hang Seng Index is 25,000 — which was tested in November 2010. Analysts expect the index to breach that resistance level towards the end of April. Institutional investors were likely to support the broad rally, with hedge funds giving it a lift, an analyst said.
WEEK AHEAD:
* A slew of IPOs in the next few weeks would likely support the rally, supported by foreign inflows, which have increased in the last three weeks, analysts said.
* SBI Holdings is expected to debut on April 14, and Hui Xian, Cheung Kong (Holdings) Ltd's yuan-denominated real estate investment trust is expected to debut on April 15.
* China's March inflation data are expected on April 15.