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A pedestrian passes by the Hong Kong Stock Exchange electronic screen in July 2023. Photo: AP
BusinessChina Business

Hong Kong stocks jump by most in 2 weeks as China injects liquidity, reports add to recovery signs

  • The city’s benchmark index logged the biggest gain in two weeks after China cut banks’ reserve ratio by 25 basis points from Friday
  • Growth in retail sales, industrial production in August both exceeded consensus forecasts
Hong Kong stock market
Zhang Shidong
Zhang Shidongin Shanghai
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Hong Kong stocks rose by the most in about two weeks after China’s central bank cut banks’ reserve requirement ratio for a second time this year to inject more liquidity into the system. Official reports showed the nation’s economic recovery strengthened.

The Hang Seng Index advanced 0.8 per cent to 18,182.89 at the close, reducing the loss for the week to 0.1 per cent. The Tech Index gained 1.5 per cent while the Shanghai Composite Index dropped 0.3 per cent.

Aluminium producer China Hongqiao added 2.7 per cent to HK$8.09 and hotpot restaurant operator Haidilao gained 2.4 per cent to HK$21.40. Zijin Mining climbed 2.8 per cent to HK$13.16 after gold futures rose to a record in Shanghai. Alibaba Group added 0.4 per cent to HK$86.25, and rival JD.com rose 0.5 per cent to HK$124.60.

The People’s Bank of China lowered the amount of the money commercial lenders must set aside as reserves from Friday. The move injected 550 billion yuan (US$75.7 billion) of fresh liquidity into the financial system, China International Capital Corp estimated.
Industrial production in China rose 4.5 per cent in August from a year earlier while retail sales increased 4.6 per cent, the statistics bureau said on Friday, both exceeding market consensus. Still, a separate report showed new home prices fell further in major Chinese cities last month.

“China’s growth cycle may be nearing a trough,” said Aninda Mitra, a strategist at BNY Mellon Investment Management in Singapore. “A more meaningful stimulus, especially through fiscal channels, is still needed to help stabilise household demand and overall market sentiment.”

Following foreign investors ‘blindly’ not a good investment strategy: Economic Daily

Overseas investors sold 2.46 million yuan of Chinese stocks on Friday via the Stock Connect, a fourth day of net outflows. That raised the sell-off to 20 billion yuan this month, according to exchange data.

Two companies started trading on Friday. Zhejiang Sling Automobile Bearing jumped 47 per cent to 55.08 yuan in Shenzhen while oil-additive producer Xian Wonder Energy Chemical slipped 8.7 per cent to 8.15 yuan in Beijing.

Other major Asian markets rose. Japan’s Nikkei 225 and South Korea’s Kospi climbed 1.1 per cent, while Australia’s S&P/ASX 200 advanced 1.3 per cent.

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