Alibaba, Meituan sustain Hong Kong stock rebound as Fed buoys markets with dovish stance through 2023
- Hang Seng Index jumped 1.3 per cent with Alibaba, Sunny Optical, Meituan pacing the rally in technology stocks
- The Federal Reserve signalled rates would remain near zero through 2023 after its rate meeting, saying the rise in bond yields was not disorderly
The Shanghai Composite Index added 0.5 per cent to close at a two-week high. All major markets in Asia all rose except in Australia, with gauges in Japan and South Korea adding at least 0.6 per cent. US equities closed at record highs in overnight trading.
Stocks rose even as 10-year Treasury yield climbed to 1.71 per cent on Thursday, touching the highest level since January last year. Fed Chairman Jerome Powell said policymakers will be tolerant of inflation and the accommodative policies will stay for an extended period of time. He also dismissed the concern about higher bond yields, saying the increase was not disorderly.
The Fed’s “latest economic projections show that the impact from the gigantic fiscal stimulus on GDP growth and inflation will come through mostly in 2021, and revert to long term trend in 2022 and beyond,” said Tai Hui, a strategist at JPMorgan Asset Management in Hong Kong. “The market reaction suggests investors are satisfied with the Fed’s explanations for now.”
The Fed’s decision is in line with market expectations and liquidity in the local banking system remains ample, the HKMA said in a statement on Thursday after the FOMC meeting.
Sunny Optical surged 9.5 per cent to HK$195.80 after reporting a 22 per cent increase in 2020 earnings. The result exceeded analysts’ estimates by 13 per cent. The stock’s 20-plus per cent pullback from a February high was overdone, according to Citigroup.
Alibaba, the owner of this newspaper, rallied 4.9 per cent to HK$233.60, the biggest gain since January 20. Rival Pinduoduo’s US-listed securities tumbled 7.1 per cent overnight after founder Colin Huang Zheng, 41, stepped down as chairman on the same day it reported active users surpassing those on the e-commerce platforms of Alibaba and JD.com.