“Investors started to return to the market [in recent days] as they saw new economy stocks and Hong Kong Exchanges and Clearing [the exchange operator] regained momentum, leading to more confidence in the market,” said Stanley Chan, director of research at Emperor Securities. “There’s still room for the [Hang Seng Index] to rise. It will not be surprising if it climbs to 25,500 to 25,800 in one to two weeks,” Chan said.

The Shanghai Composite Index closed 0.3 per cent higher at 3,381.35, its seventh gain in the past eight sessions and finishing at its highest level in three weeks. The tech-heavy ChiNext advanced 1 per cent.

Traders weighed new data out of the mainland that showed China’s services sector continued to grow in July but at a slower pace than in June. The Caixin/Markit services Purchasing Managers’ Index (PMI) was at 54.1. Above 50 signals expansion. But the gauge slipped from 58.4 in June, a record high in more than a decade.

Meanwhile, investors took note that the world’s two largest economies will hold high-level talks on August 15 to review Beijing’s compliance with the phase-one trade deal signed by the two nations, The Wall Street Journal reported. The talks will come as US-China tensions have worsened, and Chinese vice-premier Liu He, who has led the talks on the Chinese side, will voice Beijing’s concerns on Washington’s recent sanctions on Chinese tech companies, the American news outlet reported.

In Hong Kong, oil stocks were among top winners after oil prices climbed to their highest level in two weeks following the explosion in Beirut, the capital of Lebanon, and as the American Petroleum Institute reported a large draw in crude oil inventory, suggesting demand despite the raging coronavirus in the US. PetroChina added 4.5 per cent, making it the benchmark’s top percentage gainer, while Sinopec climbed 2.4 per cent.

New economy stocks continued to rise. In addition to Tencent, Alibaba, the e-commerce giant and owner of the South China Morning Post, rose 0.8 per cent, its fourth straight session of gains in the past five sessions. Food delivery giant Meituan Dianping gained 0.3 per cent, bringing its haul so far this week to nearly 9 per cent.

But Alibaba Health Information Technology – a leading telemedicine provider in China – fell 2.5 per cent after launching a follow-on new share sale to raise up to US$1.06 billion.

HKEX, the stock exchange operator, gained 2.5 per cent.

Meanwhile, the coronavirus remained on investors’ plate of concerns. Gold soared past US$2,000 an ounce, marking a record high as investors rushed into the safe haven amid low interest rates, inflation concerns and global uncertainties.

Semiconductors were among the day’s winners as China’s cabinet unveiled policies to support growth of the sector, ranging from preferential taxes, financing and intellectual property rights. As of Tuesday, Beijing is allowing a holiday of the corporate income tax for as long as 10 years for companies that have been in operation for more than 15 years and produce certain chips. At least 10 semiconductor stocks surged by the daily cap of 10 per cent.

In Hong Kong, Semiconductor Manufacturing Industry rose 4.9 per cent, while its mainland-listed shares rose 2.3 per cent. Hua Hong Semiconductor, listed in Hong Kong, gained 2.3 per cent.

Wharf REIC fell 1.7 per cent, making it the top percentage loser. It had shot up 7.5 per cent the day before as investors stampeded in to swoop up the battered shares of the owner of Times Square and Harbour City luxury shopping malls.

In Shanghai, materials stocks were top gainers, with gold-linked stocks surging by 5.7 per cent. Health care stocks also fared well.

Shanghai Runda Medical Technology, which distributes medical instruments, was among dozens of stocks that hit the daily upside 10 per cent limit after Sealand Securities initiated coverage with a “buy” rating.

In Hong Kong, new infection clusters clouded the stock market. At least five cases have been linked to four fish stalls at Hung Hom market, with 10 workers and cleaners at stores infected in the market. Another two cases were linked to two stalls in To Kwa Wan market. Health officials said they fear a wider outbreak in the city, which is mired in a deep recession amid the coronavirus, which followed the trade war and months-long protests.