Hong Kong stocks rebounded yesterday, riding an improved market sentiment following rate cuts by central banks in the region.
Fears of the deadly Middle East Respiratory Syndrome (MERS) virus also subsided as a Hong Kong medical official said 31 out of 33 suspected cases of MERS had tested negative for the virus. Two outstanding cases are still being tested and the results could take 24 hours.
The Hang Seng Index rose 0.83 per cent, or 220.21 points, to 26,907.85 after plunging about 500 points within an hour on Wednesday on reports that an unidentified woman had shown signs of fever and was taken to hospital after a trip to Seoul.
MERS has killed at least nine people and sickened dozens in South Korea since last month, prompting travel warnings and quarantine orders.
Trading in the Hong Kong market slowed to HK$126.3 billion yesterday, from the average daily turnover of HK$155.2 billion in May and HK$200 billion in April, underscoring the lack of a visible catalyst in the stock market.
“The tepid turnover in the city’s stock market suggests that investors opted to remain on the sidelines before the Federal Reserve’s meeting next week,” said Louis Tse, a director of VC Brokerage.
He said the looming interest rate hike would propel investors to switch to buy stocks of banks, which would enjoy a greater net interest margin.
Hong Kong stocks reacted positively to the Bank of Korea’s move to cut rates for the fourth time since August to a record low of 1.5 per cent and the Reserve Bank of New Zealand’s unexpected decision to lower the benchmark interest rate by 0.25 percentage point to 3.25 per cent.
Only 9 out of 50 stocks in the Hang Seng Index finished in the red yesterday, with persistent downward pressure seen in the casino sector.