Hang Seng Index jumps as record mainland funds support sanctioned stocks and market recoups most of losses since Wuhan lockdown

Mainland traders continue to add to their record HK$19.5 billion (US$2.5 billion) purchases of Hong Kong stocks via Stock Connect programme

Stocks in Asia are mixed as Malaysian equities slump after the Southeast Asian nation imposes an emergency to stem Covid-19 outbreak

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People celebrating the New Year's countdown in Wuhan in central Hubei province on December 31. The Hang Seng Index is within 1 per cent of erasing all of the losses triggered by the Wuhan lockdown a year ago. Photo: AFP

Published: 10:52am, 12 Jan 2021Updated: 5:39pm, 12 Jan 2021

Hong Kong stocks rose, lifting the market to the highest level in 11 months, on optimism mainland China funds will support local equities whipsawed by US sanctions.

The Hang Seng Index surged 1.3 per cent to 28,276.75 at the close on Tuesday, the highest close since January 22 last year. That puts the market within less than 1 per cent of erasing all the losses since China locked down Wuhan, the epicentre of Covid-19 outbreak, about a year ago.

The Shanghai Composite Index rose 2.2 per cent. It slumped 1.1 per cent in its biggest pullback in three weeks on Monday.

Mainland traders continued to pile into Hong Kong stocks after they bought a record HK$19.5 billion (US$2.5 billion) of the shares via the cross-border Stock Connect programme on Monday. They poured in another HK$10.8 billion on Tuesday, according to Bloomberg data.

China Mobile, China Unicom and China Telecom advanced by at least 6 per cent, extending gains on Monday on speculation mainland traders were buying the dip after a sell-off last week. The trio are now off-limits to US investors starting this week, banned under President Donald Trump’s November 12 executive order.

While unprecedented liquidity unleashed by central banks have helped power global stocks to new heights and stretched valuations, Hong Kong stocks remained in reasonable territory compared with their American or European peers even after a bright start to trading in 2021.

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