April 2 (Reuters) - Hong Kong’s benchmark Hang Seng index rose to seven-month highs on Thursday, while growth stocks soared on expectations of fresh money inflows from the mainland.
China has recently encouraged mainland mutual funds to buy Hong Kong shares and also expanded Chinese insurers’ investment scope, allowing them to buy stocks listed on the Growth Enterprise Market (GEM).
GEM, home to high-growth, start-up companies, continued firm on Thursday, jumping more than 3 percent.
“Hong Kong stocks are cheap,” said David Dai, Shanghai-based investment director at Nanhai Fund Management Co Ltd. “In the mainland market, it’s not easy to pick stocks now.”
Mainland small caps trade at around 100 times companies’ earnings on average, compared with a price/earning ratio of about 10 for their Hong Kong peers, according to UBS strategist Lu Wenjie.
The Hang Seng index rose 0.8 percent to 25,275.64, while the China Enterprises Index gained 1.0 percent to 12,663.12.
The Hong Kong market will be closed for a holiday from Friday to Tuesday, reopening on Wednesday. For the short trading week, the Hang Seng gained 3.2 percent, the biggest weekly rise in eight months.
Among the most actively traded stocks on Hong Kong’s main board were GOME, up 5.9 percent to HK$1.25, SMIC , down 1.3 percent to HK$0.78, and ICBC, up 1.6 percent to HK$5.85.
Total trading volume of companies included in the HSI index was 2.2 billion shares. (Reporting by Samuel Shen and Pete Sweeney; Editing by Alan Raybould)