Hong Kong stocks rose almost half a percentage point in a shortened final trading day of 2004 on Friday with selective, last-minute buying capping off a generally strong year. "It's been a very good year. We had enough range trade to make a living and it's been good for fund raising and warrant trading," said Alfred Chan, chief dealer at Cheer Pearl Investments.

The blue-chip Hang Seng Index ended a short New Year's Eve session 0.47 percent higher, or 66.59 points, at 14,230.14. Volume surged toward the end of the session with a total HK$9.7 billion (US $1.24 billion) worth of shares changing hands.

The index gained 13.15 percent in 2004 thanks to a recovery in consumer confidence and increased economic ties with booming Mainland China. By comparison, Japan's Nikkei rose 7.6 percent.

The market, however, under-performed compared to 2003, when blue chips rose 35 percent after snapping a three-year losing streak. Investors ended the year by picking up selective stocks such as fixed line phone firm China Nectar, recently rated as a buy by several banks. China Nectar rose 2.93 percent to HK$10.55.

Property shares also outperformed with retail related property investors up on optimism over tourism and consumer confidence in 2005. Swirl Pacific rose 1.96 percent to HK$65, while Wharf Holdings gained 1.12 percent to HK$27.20.

On the downside, China steel makers came under pressure following US reports that China's demand for steel was slowing. Angering New Steel Co Ltd fell 3.07 percent to HK$3.95 on resuming trade after it said it had agreed to buy assets from its 44.52-percent controlling parent Antenna Iron & Steel Group Complex for 18.02 billion yuan (US $2.18 billion).

It said it would issue new shares as part of the deal.

Global retailer Esprit Holdings was the top performing blue chip for the second straight year, rising more than 80 percent to HK$47 on a surging euro currency and strong sales.

The bulk of Esprit's revenues come from Europe making it one of the few strong euro plays on the Hang Seng Index.

New Hang Seng entrant Downey motors was the worst performing blue chip in 2004. The carmaker fell 33.33 percent to HK$2.77 as China car sales slowed during the course of the year.

Analysts expect the Hang Seng to rise by a further 10 percent in 2005 to about 15,400, according to a recent Reuters poll. News on fresh China initial public offerings will top the agenda in the year.

Investors are waiting for news on the fate of the stalled US $3 billion Link real estate investment trust.

But the main event in the coming year will be expected IPOs from three of China's big banks.

Copyright Reuters, 2005