Hong Kong stocks gain as China seen reviewing zero-Covid stance while Fed eases concerns about tightening pace

China is said to be reviewing its tough zero-Covid stance in the fight amid pressure on the economy

Investors remained wary of tech stocks as top regulator said more needed to be done to ensure an orderly market for internet-platform operators

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People walk across a bridge with a ticker board showing stock prices in Shanghai on February 22. Photo: AFP

Published: 10:52am, 3 Mar 2022Updated: 4:44pm, 3 Mar 2022

Hong Kong stocks rebounded from a two-year low amid reports China was considering softening its zero-Covid approach in tackling the pandemic. The Federal Reserve tempered concerns about its policy tightening path.

The Hang Seng Index rose 0.6 per cent to 22,467.34 at the close, even as a measure of price swings remained close to a five-month high. The Tech Index declined 1.2 per cent, while the Shanghai Composite Index slipped 0.1 per cent.

Macau casino operators Sands China and Galaxy Entertainment climbed at least 1.6 per cent, after Dow Jones reported that Beijing was looking into methods to very its zero-Covid strategy, following expert views on the situation last month. Hotpot restaurant operator Haidilao rallied 3.8 per cent on the back of a management reshuffle.

Buying sentiment improved after Fed Chair Jerome Powell said he favoured a 25 basis-point increase in its key rate this month, versus some market forecasts for a 50-basis point hike. He also signalled more aggressive measures, unless price pressure wanes, after US inflation accelerated at a four-decade high in January.

“This lowered concerns of an aggressive rate hike cycle from the Fed and spilled over to Asian equities today,” said Matthew Simpson, an analyst at StoneX in Sydney. Asian economies are less pressured to tighten, boosting sentiment on stocks in the region, he added.

Inflation concerns heightened over the past two weeks amid Russia’s invasion of Ukraine, sending oil prices above US$100 per barrel for the first time since September 2014. Futures surpassed US$110 in recent trading.