April 13 (Reuters) - Hong Kong’s bull kept raging on Monday, with the benchmark Hang Seng Index jumping nearly 3 percent to fresh seven-year highs on expectations more money will pour in to hunt for bargains.
Brokerage BOC International forecast that about 100 billion yuan ($16.09 billion) will be raised by mainland fund managers and become available for Hong Kong investment as early as May.
China recently allowed mutual funds to buy Hong Kong stocks under the Shanghai-Hong Kong Stock Connect scheme.
On Monday, investors are also encouraged by a report in Hong Kong’s Oriental Daily that speculated that the daily quota for Hong Kong stock purchases by mainlanders under the Connect scheme will be nearly quadrupled to 40 billion yuan.
The Hang Seng Index rose 2.7 percent, to 28,016.34, while the China Enterprises Index gained 4.3 percent, to 14,590.45 points.
Hong Kong’s Growth Enterprise Market also maintained strong momentum, surging nearly 6 percent, its biggest daily rise in more than nine years.
“Cheap valuation, strong cross-border liquidity and positive technical set up, Hong Kong is entering a bull market,” Hong Hao, chief strategist with BOCOM International, wrote in a note to clients.
He sets a target of 32,000 for HSI, which is 16 percent higher than the current level. For the HSCE, he forecast at least 19,000, for a gain of more than 30 percent.
Among the most actively traded stocks on Hong Kong’s main board were GOME, up 22.7 percent to HK$2.49 Ping Shan Tea, up 4.2 percent to HK$0.05 and SMIC, down 1.1 percent to HK$0.92.
Total trading volume of companies included in the HSI index was 4.9 billion shares. (Reported by Samuel Shen and Pete Sweeney; Editing by Richard Borsuk)