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Hong Kong stocks firm, set for fourth monthly rise on mainland demand

* SSEC 0.2%, CSI300 0.5%, HSI 0.4%

* HK->Shanghai Connect daily quota used 3.3%, Shanghai->HK daily quota used 10.1%

* FTSE China A50 +0.9%

SHANGHAI, Jan 29 (Reuters) - Hong Kong stocks rose on Friday and were on track for their fourth consecutive month of gains, the longest winning streak since early 2019, as mainland buying hit a monthly record via the Stock Connect linking it and the Asian financial hub.

** By midday break, the Hang Seng index added 0.4% to hit 28,652.12 points and the Hong Kong China Enterprises Index gained 0.5% to 11,387.84 points.

** For the month, HSI rose 5.2%, while HSCE increased 6%, both posting their fourth month of gains in a row, thanks to strong mainland demand.

** As of Thursday, mainland investors purchased net of around HK$300 billion ($38.70 billion) worth of Hong Kong stocks via the Stock Connect, and their buying was set to hit a monthly record, according to HKEX.

** Shares of Chinese tech giant Tencent jumped 25% in January as mainland investors substantially boosted their holdings.

** “Mainland institutional investors buy Hong Kong-listed stocks as they seek allocations to shares not listed in the A-share market,” said Qu Xinghai, general manager at Tibet Hemu Asset Management.

** “They prefer giants including Meituan, Tencent , HKEX and Xiaomi, while they are not interested in cheap traditional firms,” he added.

** Many also see bargains as the Hang Seng China AH premium index indicates A-shares of dual-listed AH companies trade at a more than 30% premium over their Hong Kong-listed shares.

** Looking forward, KGI Securities expected southbound inflows to continue in a stable and healthy pace.

** However, Sino-U.S. tensions remain a worry, as investors looked for more clues on Biden administration’s policy toward China.

** Global index providers and the New York Stock Exchange dropped Chinese companies named on a U.S. Defense Department list from their products.

** “U.S. bans would put investors holding related stocks under big pressure, as they worry about potential further sanctions,” said Hemu’s Qu.

** On the mainland, the CSI300 index rose 0.5% to 5,405.88 points at the end of the morning session, while the Shanghai Composite Index gained 0.2% to 3,513.37 points. ($1 = 7.7525 Hong Kong dollars)

Reporting by Luoyan Liu and Andrew Galbraith; Editing by Krishna Chandra Eluri

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