HK shares at 5- year high; shipping stocks jump

HONG KONG, April 6 (Reuters) Hong Kong stocks rallied on Thursday to levels not seen since September 2000 as ample liquidity prompted investors to pick up shipping and port plays and market laggards.

The benchmark Hang Seng index rose 1.93 percent to 16,411.13, recording its largest single-day percentage gain since August.

Turnover rocketed 42 percent to HK.7 billion (US.9 billion), marking the third most active trading day in the history of the Hong Kong stock exchange, exchange officials told Reuters.

The China Enterprises index of Hong Kong-listed shares in mainland companies crossed the 6,900 threshold for the first time in 8-{ years.

The index of so-called H-shares gained 1.60 percent to 6,964.44.

''There's a lot of money in the region. They're all aiming at China stocks,'' said Dale Tsang, managing director at GC Capital (Asia) Ltd.

Though the market breached a tough barrier to mark a five-year high on Monday, analysts said it had further to go.

''Technically, the market should go higher, since it just broke a resistance level at 16,000,'' said Benny Yiu, senior analyst at VC Brokerage. ''It will shoot to 16,500, or about 14.5 times on 2006 earnings, which is not too demanding.'' But others said current valuations were too rich.

''It's a bit worrying,'' said Dale Tsang, managing director at GC Capital (Asia) Ltd. ''A lot of stocks are overvalued. Our traditional pricing was between 10 to 12 times but now because of liquidity, 15 times can look like fair value.'' Shipping and port plays rallied. China Merchants Holdings (International) Co. Ltd. jumped 8 percent to HK.0 and COSCO Pacific Ltd. advanced 2.8 percent to HK.45.

Analysts said planned initial public share offerings by mainland port operators Dalian Port Co. Ltd. and Tianjin Port Development Holdings suggested a positive outlook for the shipping industry this year.

Investors chased market laggards, among them CITIC Pacific Ltd., which rose to five-year highs before settling at HK.05 for a 5 percent gain. Last week, the steel-to-property giant said it would purchase two Australian iron ore mining firms, providing it access to resources for its steel division in a move analysts said brightened the company's outlook.

Investors also snapped up Hutchison Whampoa Ltd., likewise considered a laggard. The ports-to-telecoms giant put on 2 percent to HK.05.

REUTERS SS DS1610