Hong Kong’s key stock index caps a winning month as China slowdown fuels more easing bets while Credit Suisse upgrades market

The Hang Seng Index ended the Year of the Ox with a 22 per cent decline, the worst Ox performance since the 33 per cent slump in 1997

Credit Suisse last week upgraded China, citing policy easing versus tightening bias elsewhere, and valuation appeal

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People walk past decorations to celebrate the Lunar New Year in Hong Kong on January 30. Photo: AP

Published: 10:45am, 31 Jan 2022Updated: 4:19pm, 31 Jan 2022

Hong Kong’s key stock index posed its biggest weekly gain to cap a winning month as a slowing Chinese economy fuelled hopes further relaxations in monetary policy. Equity strategists put the benchmark’s 22 per cent decline during the Year of the Ox behind them, turning upbeat as bargains abound in the market.

The Hang Seng Index advanced 1.1 per cent to 23,802.26 at the close of Monday trading, after sliding on Friday by the most in five months. The city’s Tech Index surged 2.4 per cent, its biggest gain in a week, as Alibaba Group Holding led gains among industry peers.

Alibaba, the owner of this newspaper, climbed 3.6 per cent to HK$114 while JD.com jumped 5.1 per cent and Meituan appreciated 5.6 per cent. NetEase rose 4.1 per cent and Tencent advanced 2.6 per cent.

A government report on Sunday showed the Purchasing Managers’ Index dropped to 50.1 in January from 50.3 in December. The non-manufacturing gauge, which measures activity in construction and services, fell to 51.1 from 52.7.

“We expect China to show more determination in stabilising” the economy after the Lunar New Year, said CMB International’s research team in a note published on Monday. It sees more liquidity and credit supply and fiscal support, and a friendlier policy towards the private sector, including the internet industry.

China has injected more liquidity into the system and eased borrowing costs over the past two months as the economy lost momentum since the middle of 2021. It has pledged to stabilise growth as a key policy aim for 2022.

Credit Suisse last week upgraded China to overweight against global benchmarks, and to market-weight in its Asia-Pacific strategy as the market slipped into bear territory, citing policy-easing impetus and valuation appeal, among others. The Swiss firm had downgraded the market in November 2020 and February 2021.