In the longer term, the Hong Kong stock market will move in lockstep with the A-share market because they are linked by the Stock Connect program, experts say. Asia News Photo

A mainland stock rally following the interest-rate cut on Sunday has whetted local investors' appetite for Hong Kong-listed H shares of mainland enterprises, stockbrokers said.

Reversing the down trend in the past several trading days, the benchmark Hang Seng Index rose half a percent, or 140.86 points, to close at 27,718.2 on Monday, while the Hang Seng China Enterprise index, which tracks H share prices, gained one percent to 14,182.98.

Francis Kwok Sze-chi, marketing director at Bright Smart Securities (HK) Ltd, told China Daily that the latest rate cut was indeed good news for highly leveraged mainland companies, particularly property developers.

He said the central government's easy money policy and the low interest-rate environment are all very positive to mainland developers, and their share prices will see strong growth.

China Overseas Land and Investment Ltd was among stocks that gained the most on Monday, rising more than 4 percent to close at HK$30.6. Kwok recommended buying mainland property stocks while their prices are relatively low.

He said many Hong Kong investors have already been factored in the interest-rate cut. "It didn't come as a surprise and that's why the Hong Kong stock market did not rally as much as the Shanghai A-share market on Monday."

"The benchmark index has risen a total of 1,276 points since the beginning of the year. It needs time to consolidate," Kwok said.

Linus Yip Sheung-chi, an equity analyst at First Shanghai Securities Ltd, said he is bullish about shares of airlines because they stand to benefit the most from a reduction in interest expenditure.

Yip said investors should wait for share-price adjustments of mainland developers and airlines before jumping in. "There will be some good bargains coming to the market in coming weeks," he said.

Hong Hao, chief strategist at BOCOM International Holdings Co Ltd, said he believes that both A and H shares will continue to go up after the latest rate cut.

"In the longer term, the Hong Kong stock market will move in lockstep with the A-share market because they are linked by the Stock Connect program," said Hong.

He said H shares have been trading at an average 35-percent discount to A shares and the difference between the two markets is at a historically high level. The price spread is only going to get narrower, he projected.

Hong also favors shares of mainland stockbrokerages and insurer companies, saying that they are also highly sensitive to interest-rate changes.

sophiehe@chinadailyhk.com

(HK Edition 05/12/2015 page1)