Hong Kong stocks went up 151.98 points, or 1.07 percent, to close at 14,387.48 on Wednesday in a shortened session before New Year's Day, boosted by the overnight Wall Street gains.
Turnover totaled 19.47 billion HK dollars in the half-day trading. But the Hong Kong market ends 2008 down 48 percent from the start of the year, the biggest fall in percentage terms since 1974, when the market lost about 60 percent.
The Hang Seng Index started the year at 27,853 and hasn't climbed back to that level since. The global financial crisis and a slowing Chinese economy pushed the benchmark index down to an intraday low of 10,676 on Oct. 27, the lowest level of the year.
Marco Mak, head of research at Taifook Research, said Wall Street has been "the source of most of 2008's financial tragedies."
"The resiliency of the China economy will undoubtedly dictate investor confidence in the local market in the coming year," Mak said.
Although China won't be immune from the global slowdown, the impact will likely be cushioned by the government's latest 4 trillion yuan stimulus package, which aims to boost domestic consumption, analysts said.
"The first half, especially the first quarter, will be bumpy, as we have to face poor economic figures and corporate results," said ICEA Securities strategist Ernie Hon.
"The macro environment should also be unfavorable, unemployment is likely to jump sharply." He said the Hang Seng Index will likely fall further to a range of 10,000-11,500 during the first half of 2009.
The Hong Kong stock market will re-open Friday, after the New Year holiday. Among the 42 blue chips, Foxconn is the biggest decliner of the year, due to weakening global demand for electronic products. The stock ended 8.0 percent higher at 2.57 HKdollars Wednesday, but it has lost 85 percent this year.
Citic Pacific, which rose 1.3 percent to 8.38 HK dollars, is Hong Kong's second biggest decliner of 2008. It fell 81 percent for the year due to realized and potential losses of 18.6 billion HK dollars from forex bets, primarily on the Australian dollar.
CLP fared the best, with only a 1.2 percent drop this year. Its smaller peer, Hongkong Electric, which fell 3.0 percent in 2008, is the second-best performing blue chip. (1 U.S. dollar = 7.742 HKdollars)