Hong Kong stocks jump to 7-week high on signs of thawing China-US ties while Beijing moves to stimulate economy

  • Signs of thawing relations between the US and China are giving fresh hopes to investors while Beijing unveils more measures to revive economy
  • Gains limited by official reports showing China’s key economic data trailed market consensus in October

Hong Kong stocks rose for a third day, lifting the benchmark to a nearly seven-week high amid signs of thawing in China-US relations and growing optimism Beijing will roll out more measures to revive the economy.

The Hang Seng Index climbed 2.8 per cent to 18,111.88 as of 11.16am local time, heading for the highest close since September 21. The Tech Index gained 4.6 per cent and the Shanghai Composite Index added 1.1 per cent.

Tencent Holdings jumped 7.1 per cent to HK$279.20 and Alibaba Group surged 8.3 per cent to HK$76.95. The two tech juggernauts are due to release quarterly results on Wednesday and Thursday, respectively. Macau casino operator Sands China advanced 4.7 per cent to HK$19.62 and property management firm Country Garden Services gained 8.5 per cent to HK$18.12. Ping An Insurance climbed 3.6 per cent to HK$43.70 while HSBC added 1.4 per cent to HK$44.25.

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The US said it will resume cooperation with China on areas ranging from climate change to food security following the first in-person meeting between President Joe Biden and his counterpart Xi Jinping in Bali on Monday. The US will also send Secretary of State Anthony Blinken to visit China to further warm bilateral ties.

Separately, China’s banking regulator said the nation’s developers will be allowed to use some of their presale funds in escrow accounts to keep their operations afloat, adding to measures to tackle a liquidity crunch that has been plaguing the industry over the past two years.

“Hong Kong stocks will continue the uptrend this quarter, as we are seeing a turnaround for corporate earnings after a slew of supportive measures including easing of the pandemic controls,” said Cheng Yu, a fund manager at HSBC Jintrust Fund Management in Shanghai. “The easing of the tensions between China and the US has also alleviated concerns among overseas investors, which will help to repair stock valuations.”

The Hang Seng Index has advanced 24 per cent so far this month, recouping US$665 billion in market capitalisation for the Hong Kong market and turning it from a laggard to a leader among its global peers. Sentiment has quickly improved after China on Friday announced a reduction of the mandatory quarantine period for travellers and the central bank encouraged more lending to property developers in a 16-point plan to bolster the beleaguered sector.

China Vanke added 1.3 per cent to HK$14.02, while China Overseas Land and Investment rose 1.5 per cent to HK$20.35 and Sun Hung Kai Properties gained 1.1 per cent to HK$92.90.

Elsewhere, traders brushed aside official reports today that showed China’s key October economic data trailed estimates. Industrial production increased 5 per cent from a year earlier, falling short of the 5.3 per cent consensus estimate. Retail sales fell 0.5 per cent, missing the forecast of a 0.7 per cent gain.

Developer Country Garden slid 7.1 per cent to HK$3.03 after proposing a stock placement to raise HK$3.87 billion (US$493 million) in net proceeds to help repay offshore debts.

Other major Asian markets were mixed. Japan’s Nikkei 225 added 0.1 per cent per cent, while South Korea’s Kospi slipped 0.1 per cent and Australia’s S&P/ASX 200 lost 0.3 per cent.

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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.

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