All of the 25 stocks listed on Shanghai’s technology innovation board, also known as the STAR Market, closed higher on its third day, rebounding from sharp losses on Tuesday. Stocks on the STAR board can only be bought in China for now, but are expected to later be available through the Stock Connect programme.

Fujian Forecam Optics, which specialises in cameras and optic components, was the top winner, with a 49 per cent increase. Transaction volume in the STAR stocks stood at 23 billion yuan (US$3.3 billion), slightly up from the 20 billion yuan recorded Tuesday.

Technology shares drove the advance, after the US government said it will handle requests by American tech companies for waivers over the Huawei Technologies blacklisting within weeks.

US Commerce secretary Wilbur Ross said in an interview with Bloomberg Television on Tuesday that the administration will deal with the more than 50 waiver applications from 35 companies “within the next few weeks”.

The Huawei blacklisting, put in place at the end of May, prevents US companies from supplying hardware, software and services to the Chinese telecom giant.

In Hong Kong, Sunny Optical Technology, which supplies phone camera lenses to Huwei, jumped 3.5 per cent to HK$93.4. Telecom equipment giant ZTE surged 3.6 per cent in Shanghai to 32.71 yuan and rose 2.4 per cent to HK$23.5 in Hong Kong.

A gauge of 128 stocks related to 5G listed in Shanghai and Hong Kong climbed 2.4 per cent, with Shenzhen Envicool Tech, Zhejiang Yueling and Dongshan Precision Manufacture surging by the daily limit of 10 per cent.

“The supply of components to Huawei from US companies could resume, which has lifted investors’ confidence in the smartphone manufacturing chain,” analysts led by Huang Leping wrote in a report on Wednesday.

Eight 5G smartphones recently received approval from Chinese authorities to go to market, with four of the models developed by Huawei. This will help Huawei strengthen its position in the high-end segment, according to CICC.

Traders were also hopeful after White House economic adviser Larry Kudlow signalled confidence about trade talks, said Louis Tse Ming-kwong, managing director of VC Asset Management.

“I'm not surprised the market shot up. Wall Street was up quite a bit [last night]," said Tse. “Sentiment improved, I would say.”

Top US officials will travel to China next week for the first face-to-face talks since the G20 summit at the end of June, media outlets including the SCMP reported.

“In the near term, I think there is a chance of [the Hang Seng] going up to 29,000,” said Tse, adding that US President Donald Trump seems to be holding back of late on some of his anti-Chinese rhetoric.

In Hong Kong, Tencent Holdings climbed 2 per cent to HK$365.6, after the company said it is working with Japanese video game company Nintendo sell the Switch console in China. The companies will hold a joint press conference about the launch in China on August 2, according to Chinese media.

Chinese sportswear maker Anta Sports jumped by as much as 3.3 per cent to a fresh record high of HK$60.45, extending a 10-session winning streak.

The company said it expects a gain of as much as 25 per cent in its net profit for the first half of the year, from 1.95 billion yuan (US$283 million) in the same period last year, according to its stock exchange filing on Monday night.

The stock has climbed by 19 per cent from a recent low on July 10, in spite of activist short-seller Muddy Waters’ repeated attacks since early this month. Muddy Waters claims the company secretly controlled distributors and suppliers to inflate profit margins. Anta has denied all allegations.