Hong Kong stocks climb as China moves to stem yuan weakness, pledges support for economy while HSBC slips

Stocks rebounded from a six-week low, with tech leaders like JD.com, Alibaba and Meituan surging by more than 3 per cent

China will lower the reserve ratio on foreign-currency deposits, unleashing US$7 billion to stem yuan’s depreciation while PBOC reaffirms support for economy

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People walk past tickers showing Hong Kong stocks outside the Exchange Square in Central, Hong Kong on April 11. Photo: EPA-EFE

Published: 10:57am, 26 Apr 2022Updated: 5:03pm, 26 Apr 2022

Technology stocks helped lift the market in Hong Kong from a six-week low as China took steps to prevent the yuan from weakening and ease concerns about capital outflows. Losses in HSBC and other lenders limited gains.

The Hang Seng Index rose 0.3 per cent to 19,934.71 at the close, halting an almost 8 per cent slump over the past five trading days. The Tech Index gained 2.9 per cent, recouping all of Monday’s slump as JD.com, Meituan and Alibaba Group surged by at least 3 per cent.

The Shanghai Composite Index dropped 1.4 per cent, reversing an earlier 0.9 per cent advance, adding to the biggest sell-off in two years on Monday. The Shenzhen Component Index sank 1.7 per cent.

China’s central bank will cut the reserve requirement ratio on foreign-currency deposits from May 15. The estimated US$7 billion liquidity infusion from the move could ease the depreciation pressure, Goldman Sachs said, after the yuan slid past the 6.56 level this week. The currency strengthened 0.2 per cent to 6.5462.

Separately, the People’s Bank of China said recent gyrations in the financial markets were driven by expectations and sentiment, not fundamentals. It will ramp up prudent monetary policies to support industries and companies battered by the pandemic, it said in a statement on Tuesday.

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