HOPES the Central Government will allow arbitrage trade between Hong Kong and mainland shares sent Hong Kong stocks higher Thursday, with the index hitting an intraday record above the psychological 30,000 mark.

Traders said they expect the blue-chip Hang Seng Index to remain volatile in the near term, but said abundant liquidity coming into the market could help the index rise further.

The blue-chip Hang Seng Index ended up 0.6 percent at 29,465.05, after rising to an all-time high of 30,025.07 in the morning.

The share swap, if implemented, should narrow the 47 percent premium that A shares now command over their Hong Kong counterparts.

A shares are more expensive than their Hong Kong-traded equivalents, largely because mainlanders have few investment choices as the mainland’s capital controls restrict inbound and outbound investment flows.

“Mainland-related stock is the main driver for the index,” said Ben Kwong, chief operating officer at KGI Asia Ltd. “The through-train scheme, arbitrage program and companies issuing A shares on the mainland could drive H shares up further.”

Through train refers to the landmark direct offshore investment program for mainland retail investors first announced by the Central Government in August. (SD-Agencies)