Hong Kong stocks rose on Wednesday morning, extending a five-month high, with consumer-related plays gaining ground ahead of China's "golden week" holiday and local property issues extending recent gains.
The benchmark Hang Seng Index was up 0.76% at 22,169.93 by the midday trading break, less than 1% below its peak for the year reached in April.
The index is up 8% this month and is well into technically overbought territory according to the relative strength index, currently above 73.
The last time the RSI was around this level in August, the index fell about 7% to a one-month low.
"We could see some consolidation at these levels after this fairly strong rally," said Mark To, head of research at Wing Wung Financial Group in Hong Kong. "The performance of all the upcoming IPOs will be important to watch. If they do well, that might push the market higher."
Since the beginning of September, at least 15 companies have launched IPOs in Hong Kong to raise a total of about $4.5 bln as market conditions improved.
American International Group Inc inched closer to its ambitious plan to list Asian unit AIA Group after securing approval from the Hong Kong stock exchange.
RETAILERS, PROPERTY SHARES RALLY
Footwear retailer Belle International Holdings Ltd was up 4.5%, leading a rally in consumer-related plays.
"The National Day holiday will give a strong boost to retail sales," Dongliang Chang, analyst at China Everbright Research, said in a note to clients, adding that although discounts may slightly compress margins at department stores, doubling or even tripling sales during the holiday would largely offset that impact.
China Resources Enterprise Ltd, which produces Snow, China's top beer brand, was up 2.1%.
Local property counters extended recent gains with investors increasingly optimistic that commercial and retail demand for Hong Kong real estate will remain robust.
Conglomerates that operate large commercial properties in Hong Kong were up in active trade followed by local developers.
Swire Pacific Ltd rose 3.2% on more than 2.5 times its average 30-day volume, while Wharf (Holdings) Ltd was up 2.1%. Wharf, trading at an all-time high, is the month's top performer on the Hang Seng Index, up more than 22%.
China Unicom (Hong Kong) fell 3.3% and was the top losers on the Hang Seng Index after Deutsche Bank AG downgraded the stock to "sell" from "buy" on the company's inability to ramp up subscriber additions despite increasing promotional activity.
The brokerage also cut its long-term forecast for 3G subscribers, a key growth area for China Unicom.
Mainland China's markets are closed September 22-24, October 1 and October 4-7. Hong Kong's market will shut on Thursday and reopen on Friday.
