STOCKWATCH: Hong Kong China plays higher on optimism over 10th economic plan

HONG KONG (AFX-ASIA) - China related stocks were higher in morning trade on expectations that China's 10th five-year economic plan unveiled by Premier Zhu Rongji yesterday will help the country continue its market reforms and eventually boost the profitability of Chinese enterprises, dealers said. At 10:43 am, the Hang Seng China Enterprises index was up 4.30 points at 402.64, while the Hang Seng CAC index was up 17.43 points at 1169.84. The Hang Seng Index was up 93.10 points at 14,228.36 on turnover of 2.01 bln hkd. Gideon Lo, an investment strategist with Kim Eng Securities, said hopes for continued market reform in China drew more buying into red chips and H-shares this morning. "I think state-owned enterprises will be the major beneficiaries of the plan," Lo said, adding that China is going to introduce modern management skills and corporate governance to repolish its state-run companies. "One of the interesting things (about it) is that China is expected to introduce stock option initiatives, which has been perceived as a western concept, to modernise its enterprises," Lo said. Lo said he expects the energy, petrochemical, aviation and telecom sectors will in particular benefit from the reforms. Shanghai Petrochemical added 0.03 hkd to 1.03 and PetroChina gained 0.02 to 1.39. Harbin Power rose 0.01 to 0.42 and Shandong Power gained 0.03 to 1.46. "The National People's Congress has placed more emphasis on economic issues rather than political issues. The change is needed for China's future development," Lo said. Legend rose 0.15 to 5.85, China Resources gained 0.30 to 12.05 and Shanghai Industrial added 0.05 to 14.35.

Related stock : (NIL)