Hong Kong stocks gained 1.89 percent on Friday after the Monetary Authority reduced the base rate to 3.5 percent following the Federal Reserve's move.

The Monetary Authority, the de-facto central bank in Hong Kong, sliced the Base Rate by 25 basis points to 3.5 percent after the 0.25 percent cut in the U.S. federal funds target rate.

The equity market obviously gained momentum by the Monetary Authority's rate cut as it resumed trading Friday from the May Day holiday suspension Thursday.

The benchmark Hang Seng Index surged 569.62 points, or 2.21 percent, to open at 26,324.97 and trimmed its gains slightly to 485.367 points, or 1.89 percent, to close at 26,241.02.

Turnover rose to 89.06 billion HK dollars (11.42 billion U.S. dollars from Wednesday's 82.61 billion HK dollars (10.59 billion U.S. dollars).

Market heavyweight HSBC, which accounts for the largest weighting of the Hang Seng Index, gained 0.89 percent to 136.3 HK dollars, lifting the index by 34.5 points alone.

China Mobile, the largest mobile phone operator in the country and the market's largest stock measured by capitalization, advanced 2.39 percent to 136.1 HK dollars, boosting the index by 52.27 points.

Energy sectors were among the major driving force for the market's gains. PetroChina, the country's largest oil producer, surged 4.14 percent to 12.08 HK dollars. Sinopec, Asia's largest refiner, soared 5.08 percent to 8.69 HK dollars. CNOOC, China's largest offshore oil producer, underperformed the entire market by retreating 2.91 percent to 13.36 HK dollars from previous days of rallying.

Hong Kong's property companies all rose, boosted by the Monetary Authority's base rate cut.

SHK Properties, the largest house developer in Hong Kong, jumped 2.93 percent to 140.5 HK dollars. Cheung Kong, one of the biggest housing companies controlled by tycoon Li Ka-shing, rose 2.55 percent to 124.5 HK dollars. Sino Land rocketed 9.14 percent to 21.5 HK dollars. Henderson Land increased 2.86 percent to 61.2 HK dollars. Hang Lung surged 6.47 percent to 33.75 HK dollars. New World Development went up 6.47 percent to 21.4 HK dollars.

Hong Kong Exchanges and Clearing Limited, the market's sole operator, moved up 4.59 percent to 166.5 HK dollars.

China Enterprise Index, or H-shares, which was composed of 43 companies registered on the Chinese mainland, soared 400.9 points, or 2.82 percent, to close at 14,631.15.

China's banking companies and insurers listed in Hong Kong were all higher. Heavily traded ICBC, China's largest lender, rose 1.95 percent to 6.29 HK dollars. Bank of China, the country's second largest bank, added 2.01 percent to 4.06 HK dollars. China Construction Bank, the third largest bank in China, went up 2.13 percent to 7.19 HK dollars. Bank of Communications rebounded 2.14 percent to 11.46 HK dollars. China Merchants Bank added 1.54 percent to 33.05 HK dollars. China Life, the country's largest life insurer, rose 3.99 percent to 35.15 HK dollars. Ping An increased 3.18 percent to 76.3 HK dollars. PICC P&C rose 2.09 percent to 7.8 HK dollars.

(Xinhua News Agency May 3, 2008)