Hong Kong stock up on HSBC, state firm merger hopes
April 27 (Reuters) - Hong Kong stocks advanced to fresh seven-year highs on Monday, led by Chinese state-owned giants on expectations that Beijing will accelerate mergers among state-owned enterprises (SOEs).
China will likely cut the number of its central government-owned conglomerates to 40 through massive mergers, as Beijing looks to overhaul the vast underperforming state sector, state media reported on Monday.
Currently, there are 112 SOEs controlled by the central government.
The Hang Seng index rose 1.3 percent to 28,433.59 points, while the China Enterprises Index gained 1.7 percent to 14,741.20.
The index that tracks Hong Kong-listed SOEs gained 1.6 percent.
The market was also bolstered by index heavyweight HSBC Holdings Plc, which jumped 3.6 percent after Europe's biggest bank ordered a review into whether it should move its headquarters out of Britain and potentially back to its former home in Hong Kong.
HSBC paid a UK bank levy of $1.1 billion last year. Moving its headquarters would eliminate the need to pay more than three-quarters of that levy -- a potential boost to earnings of almost $1.4 billion, according to brokerage Bernstein.
Oil giant Sinopec Corp surged 7.2 percent and its state-owned rival PetroChina Co Ltd jumped 6.7 percent on merger expectations. (Samuel Shen and Kazunori Takada; Editing by Kim Coghill)
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