Hong Kong stocks gain as China’s rate cut lifts hopes of economic momentum
- China’s central bank cut its seven-day reverse repo rate, loan prime rates in a move to increase monetary support for the real economy
The Hang Seng Index advanced 1.3 per cent to 17,635.88 at close, after falling as much as 0.6 per cent. It was the biggest single-day gain since July 12. The Hang Seng Tech Index jumped 2.1 per cent, but the Shanghai Composite Index retreated 0.6 per cent.
“This move is a dovish surprise given investors largely expected the PBOC to wait for the Fed and/or the July Politburo meeting,” Goldman Sachs analysts said in a note. “In our view, the policy rate cut echoed the unusual comments on the near-term growth headwinds in the communique for the third plenum.”
The Hang Seng Index slumped almost 5 per cent last week, posting its biggest weekly fall in almost two months after the third plenary session for the Communist Party’s Central Committee failed to impress investors, even as it hammered out the long-term development objectives such as tech innovation and new quality productive force as widely expected by the market.
“Trump has a slight edge over Harris, but investors need to be ready for surprises,” said Vasu Menon, the managing director for investment strategy at Oversea-Chinese Banking Corp. “This is the constant seen so far in 2024 and nothing should be taken for granted.”