Hong Kong stocks climb by most in six weeks as traders shake off bubble talks, markets turn to China for policy direction
- Galaxy Entertainment, ICBC led gainers as traders look forward to policy support as China gets ready for the ‘Two Sessions
- Bubbles tend to get pricked by higher rates, but central bankers are keeping their needles safely tucked away for now, Schroders says
The Hang Seng Index surged 2.7 per cent to 29,880.42 at the close on Wednesday, the biggest gain since January 19. Gaming stocks led gainers after Macau scrapped a requirement for visitors to produce negative Covid-19 test results before entering the gambling hub, while Chinese banks also gained. The Shanghai Composite Index added 2 per cent.
Guo’s comments, however, should not be interpreted as an imminent move by China to raise borrowing costs, as he tends to attach great importance to issues like financial risks and asset bubbles, according to Guotai Junan Securities. His opinions had little relevance to short-term adjustment in policies in the past, it added.
“China still needs to guard against risks such as the increases in bad loans and bond defaults, and the global scenario of slow growth, low inflation and interest rates will persist,” said Huang Wentao, an analyst at CSF Financial. “There’s no need for China to tighten policies too quickly.”
Still, Hong Kong’s stock market has retreated almost 4 per cent since hitting a two and a half-year high on February 17, with traders facing the wildest price swings since July. The benchmark has alternated between gains and losses over the past week as bond yields jumped amid concerns central banks will taper their extraordinary stimulus as economies rebound.
Markets across Asia all gained on Wednesday as futures on US equities rose following a decline in bond yields. A Federal Reserve official said that the tumult in the bond market will delay the central bank’s plan to pare debt purchases.
“Markets feel bubbly but bubbles tend to get pricked by higher rates,” Johanna Kyrklund, chief investment officer and global head of multi-asset investment, said in a note to clients. The sheer scale of economic stress created by lockdowns makes the unwinding of stimulus measures unlikely. “For now, the central bankers are keeping their needles safely tucked away.”
Traders are also keeping a close eye on China’s annual legislative conference that will kick off on Friday. Delegates from across the country will deliberate on and endorse policies from the full-year economic growth target and a host of subjects including the defence budget, technology innovation and carbon neutrality.
Macau casino operator Galaxy Entertainment surged 7.7 per cent to HK$74.50 and peer Sands China rallied 5.5 per cent to HK$37.55. Industrial and Commercial Bank of China gained 5.8 per cent to HK$5.28 and China Construction Bank added 5.6 per cent to HK$6.40.
Hong Kong Exchanges and Clearing rose 2.1 per cent to HK$498 after the city’s securities regulator approved the appointment of Nicolas Aguzin of JPMorgan Chase as the bourse operator’s CEO for a three-year term.
SciClone Pharmaceuticals was unchanged from the initial public offering price of HK$18.80 on its Hong Kong market debut. On the mainland, Chinese energy-saving equipment Doright Co surged 630 per cent to 61.39 yuan and Chengdu XGimi Technology jumped 296 per cent to 530.01 yuan.
