Hong Kong's blue chip Hang Seng Index has risen 24.54 per cent so far this month, closing at 9,817.75 points on Friday.

"Sentiment has improved compared with a few months ago and many stocks have rebounded. Turnover has also increased," said Research Manager Ricky Tam at Delta Asia Securities.

"Many companies which have prepared to seek a listing may take this opportunity to proceed with their plans. Though the response still may not be exciting, many of them are not aiming to raise funds but are trying to build up their reputations through the listing," he said.

Corporate finance sources said about four or five China related companies from the property, agriculture and manufacturing sectors wanted to list before the end of the year.

China's business news newspaper reported this month that the country's State Economic and Trade Commissionplanned to add 150 state enterprises to the candidates for listing in the next three years.

The Wen Hui Daily said the Chinese Securities Regulatory Commission (CSRC) would give priority to firms with the potential to advance agricultural technology to boost crop yields and overall efficiency. Expectations of interest rate cuts in Hong Kong may aid listing plans as investors return to the stock market hoping for signs of improvement in the economy, analysts said.

Major Hong Kong banks decided this month to cut Prime lending rates by 25 basis points to 9.75 per cent, the first since March 30, when they cut rates to 10 per cent from 10.25 per cent.

"Improved market sentiment will help the listing of firms whose businesses have strong growth potential and which offer attractive pricing," said Adrian Ngan, head of Hong Kong research of BNP-Prime Peregrine Securities.

"Investors will only consider those which have strong growth potential and low issue price," Ngan said.

The closure of GuangdongInternational Trust and Investment Corp, an investment arm of the Guangdong provincial government that was unable to repay its debts, had made investors cautious about the financial health of red chip company parents making H-share issues probably more attractive for investors, Ngan said.

H-shares are the shares of China-incorporated enterprises listed in Hong Kong. Red chips are Hong-Kong based enterprises with mainland Chinese backing.

Analysts said investors would demand more information on parent companies of China plays seeking a listing in Hong Kong.

People generally knew very little about the management and track record of listing candidates, said Philip Wong, an analyst at Pacific Challenge.

"IPOs are considered a high risk investment, particularly when people are looking for safe investments," he said.