Hong Kong stocks extend gains, index at a 6-week high with Beijing seen injecting more liquidity, reviving property sales
- Investors bet Beijing will boost the economy with support measures after industrial output and retail sales growth missed forecasts
- China’s central bank lowered a key short-term policy rate this week but analysts say authorities are cautious about injecting aggressive stimulus
Hong Kong stocks extended gains, sending the benchmark gauge to close above the 20,000-mark for the first time in six weeks with investors confident that China will ramp up stimulus measures to bolster growth after a series of dismal economic data.
The Hang Seng Index rose 1.1 per cent to 20,040.37 at the close, the highest level since May 8. The benchmark capped a third weekly advance after a 3.4 per cent rally from last Friday. The Tech Index advanced 0.8 per cent and the Shanghai Composite Index added 0.6 per cent.
Lenovo Group jumped 2.7 per cent to HK$8.53, and Zijin Mining added 2.8 per cent to HK$12.32. Alibaba Group rose 2.9 per cent to HK$91.60, and Tencent climbed rallied 2.3 per cent to HK$363.
“Policymakers will need to roll out more support to re-energise the economic recovery,” HSBC analysts said in a report while remarking that China’s activity in May showed that the recovery momentum is losing steam, with industrial output, FAI and retail sales all missing market expectations.
“Our expectation is for the PBOC to continue to use quantity-based tools to provide credit support while guiding lower financing cost of the economy. We expect more support will come through to keep liquidity ample, such as through increased MLF injections, OMOs and a 25 billion yuan RRR cut in the near term,” they added.
The government could also be preparing the ground for possible support measures that dovetail with these liquidity rate cuts said Jonas Short, analyst at Everbright Securities, noting that the low-base effect will diminish in economic data from next month.
