Benchmark seen soaring to 28,900

The Hong Kong benchmark may jump as much as 23 percent to hit 28,900 this year. This is fueled by the banking and property sectors, according to the Credit Suisse Securities.

Rising asset prices are attributed to the low interest rates while the valuation of mainland banks is still attractive, said research director Cusson Leung Kai- tong.

Credit Suisse forecasts the Hang Seng Chinese Enterprises Index to reach 16,000 in 2011 and the Shanghai Composite Index to test 3,600.

The securities firm also projects loan growth at local lenders of up to 15 percent this year. Market liquidity is mainly from the banking system, instead of fund flows from overseas. "Asset prices are inevitably growing thanks to the currency peg with the US dollar, inflation and capital inflow," said chief Asia economist Tao Dong.