Hong Kong stock index soars as US Fed’s dovish stance give investors confidence to swoop in on Tencent shareholder’s divestment

Hong Kong stocks rose to the highest level in three weeks, as the US Federal Reserve’s pledge to keep accommodative monetary policies in place boosted investors’ sentiment, emboldening them to swoop in on the largest stock on the benchmark Hang Seng Index, as it faces a divestment by a shareholder.

The city’s benchmark Hang Seng Index rose 333.27, or 1.2 per cent, to a three-week high of 29,008.07, clawing back its 0.3 per cent decline and more, led by advances in so-called old-economy companies including the insurer AIA Group, and the garments producer Shenzhou International Group Holdings. In China, the Shanghai Composite Index rose by 2.9 points to 3,482.55 while the Shenzhen Composite Index in southern China’s technology hub declined by 0.16 point to 2,257.95.

Sentiment in the market was buoyed after minutes from the US Fed’s March meeting showed that policymakers have agreed to see more headway on the economic recovery before they taper the bond-purchasing programme, a strategy that aims to keep debt yields and borrowing costs low. Meanwhile, they also played down the fall out of rising bond yields that have been fuelled by the inflation outlook, saying that it is a reflection of a resilient growth outlook.

“Ample monetary and fiscal stimulus, combined with hopes that the vaccine roll-out will accelerate globally are encouraging investors to allocate more of their assets into stocks at the expense of bonds,” said Luca Paolini, chief strategist of Pictet Asset Management. “We don’t expect this pattern to change in the near term.”

The uptick in Hong Kong stocks tracked a moderate gain that pushed up the S&P 500 index by 0.2 per cent to a record close in overnight trading. Other major markets in Asia were mixed on Thursday, with benchmarks rising in South Korea, Taiwan, Indonesia and Australia. The Nikkei 225 index declined on the Tokyo Stock Exchange.