Hong Kong stocks posted biggest their single-day gain in almost three weeks on Thursday, led by banks and property developers, on speculation that the US may announce another round of quantitative easing and China may unveil further measures to boost its stuttering economy.
Zhou Xiaochuan, head of the People's Bank of China, said after the market closed on Wednesday that the central bank must use "all the tools" available to manage monetary policy effectively, fuelling speculation China may announce further cuts in the reserve requirement ratio (RRR) or interest rates.
The Hong Kong market was also boosted by minutes from the last Federal Open Market Committee (FOMC), which were released early on Thursday showing that some policy-makers members favour more stimulus measures if the world's largest economy continues to stagnate.
“The market sentiment was encouraged by the speculation of further easing speculation in both China and the US,” Matthew Kwok, vice president at global investment strategy at Haitong International Securities Group, told SCMP.com.
“The fresh PMI data looks so bad that China’s central bank may have to act to avoid further worsening of the economy,” he added, referring to Thursday's HSBC Flash China manufacturing purchasing managers index (PMI) for August, which showed that the indicator had fallen to its lowest level since November, from 49.5 in July.
The benchmark Hang Seng Index rose 1.23 per cent to close at 20,132.24 on Thursday. The Hang Seng China Enterprises Index, which tracks the performance of Hong Kong-listed China enterprises, gained 1.42 per cent to close at 9,836.14.
Industrial and Commercial Bank of China (1398.HK) gained 1.59 per cent to close at HK$ 4.48. Henderson Land (0012.HK) jumped 4.7 per cent to HK$49.05, as financial institutions including Credit Suisse and Goldman Sachs raised their price targets for the stock after it posted HK$7.7 billion interim profit.
Yet Haitong's Kwok said the market still lacks upside momentum because central banks have not yet announced any concrete measures. “Everyone is trading based on their own imagination,” he said, adding that the benchmark index has been range-trading between 19,800 and 20,300 for over two weeks.
China’s exports declined at their sharpest rate since March 2009 in August, and dragged the PMI to a nine-month low, according to data compiled by HSBC and Markit and released on Thursday morning.
“To achieve the stated policy goal of stabilising growth and the jobs market, Beijing must step up policy easing to lift infrastructure investment in the coming months,” HSBC Chief China Economist Qu Hongbing said in a morning note to investors.
TCL Multimedia Technology (1070.HK) surged 9.9 per cent to HK$3.87 after it announced a partnership with Tencent (700.HK) to co-launch a television to allow users to access its online games and videos.
Leading Chinese sportswear firm Li Ning (2331.HK) slumped by 3.84 per cent to HK$4.26 after saying profit slumped by 84.9 per cent in the first half, due to an “industry slowdown and intensifying competition”.