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A woman walks past a display showing the latest stock exchange data, in Shanghai in November 2022. Photo: EPA-EFE

Hong Kong stocks arrest slide as funds put US$1 billion back into China markets and yuan stabilises

  • Stocks pare weekly loss as funds ploughed back US$1 billion into China markets; technical indicators suggest the sell-off is near exhaustion
  • Goldman sees stronger recovery momentum in China’s economy in the second half; the yuan recovers against the US dollar
Hong Kong stocks rose as investors picked up beaten companies as values emerged after the market slumped to a one-month low this week. Foreign funds bought more Chinese equities, helping arrest the yuan slide.

The Hang Seng Index gained 2.3 per cent to 18,057.45 at the closing of Friday trading, the most since September 4. The Tech index jumped 3.7 per cent, while the Shanghai Composite Index gained 1.6 per cent. The relative-strength indicators on both gauges in Hong Kong approached levels deemed oversold.

All but four of the 80 index members advanced. Tencent Holdings jumped 3.9 per cent to HK$314.80, Alibaba Group advanced 4.7 per cent to HK$86.50 and Meituan rallied 3.1 per cent to HK$119.90. Netease surged 6.2 per cent to HK$161.90 while EV maker BYD strengthened 3.3 per cent to HK$248.40.

The Hang Seng Index has been on a slippery slope this month. BlackRock strategists downgraded Chinese stocks earlier this week, while a hawkish Fed pause added to the misery. China’s slowdown has not been bad enough for Beijing to launch a stimulus bazooka, BCA Research said.

Today’s rebound helped narrow the benchmark index’s losses this week to 0.7 per cent. Foreign investors bought 7.5 billion yuan (US$1 billion) worth of onshore-listed stocks so far on Friday, the most in seven weeks, Stock Connect data shows. They dumped about US$15 billion of them in the preceding six weeks.

Chinese stocks are due for an 8% rebound as market nears bottom, UBS says

Recent data out of China, including activity, credit, export and inflation, signalled economic growth and inflation have bottomed out, according to Goldman Sachs, giving momentum to recovery in the second half. UBS this week said Chinese stocks were due for a rebound as valuations and data improved.

The yuan strengthened to 7.3007 per US dollar in recent trading in Hong Kong, versus 7.3075 on Thursday. The currency is still hovering near a 16-year low in the onshore market, after depreciating about 5 per cent this year.

Other key Asian markets were mixed after US stocks suffered the worst slump since March, in reaction to the Federal Reserve’s hawkish policy pause on Wednesday. Australia’s S&P/ASX 200 added 0.1 per cent. The Nikkei 225 Index in Japan dropped 0.5 per cent, while South Korea’s Kospi lost 0.3 per cent.