Hong Kong stocks evade bear’s clutches as markets end US$1.2 trillion rout while China state-run media talks up prospects

Hang Seng climbed 1.5 per cent after a three-day rout that erased more than US$1.2 trillion from benchmark stocks in mainland and Hong Kong

China’s state-run media published more commentaries to assure investors, citing policy misunderstanding for recent losses, among others

Reading Time:2 minutes

Stock bulls are in hiding after a backlash of more than US$1.2 trillion amid China regulatory risks. Photo: Xinhua

Published: 10:54am, 28 Jul 2021Updated: 5:29pm, 28 Jul 2021

Hong Kong stocks rose from an eight-month low as investors bet the market rout that erased more than US$1.2 trillion of value in the past three days was overdone. China’s state-run media made another attempt to shore up sentiment in front-page reports.

The Hang Seng Index rose 1.5 per cent to 25,473.88 at the close of Wednesday trading. The benchmark earlier slumped almost 1 per cent to sink the market into bear territory, or 20 per cent below its February 17 peak. The Hang Seng Tech Index jumped 3.1 per cent, the biggest gain since April 1, while the CSI 300 Index of major stocks in Shanghai and Shenzhen rose 0.2 per cent.

The relative-strength index for the three stock benchmarks fell yesterday to below 30, a threshold that signals an oversold market.

“It‘s worth a bet at current levels” as the need to cut losses has passed, said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “Investors with abundant cash can pick up some bargains first.”

Meituan, WuXi Biologics and Country Garden Services led the Hang Seng rally as they surged by 7 to 18 per cent. Tencent Holdings gained 0.3 per cent to HK$447.20, reversing an 18 per cent plunge in the preceding three trading days.