Hong Kong stocks arrest 7-day slump for first winning day in 2024 as mainland China funds step up purchases

Funds from mainland China turned net buyers of stocks on Wednesday, taking their purchases this year to HK$11.5 billion (US$1.5 billion)

Hang Seng recovered from a 14-month low as sentiment on US, regional equities improved

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People walking outside the Exchange Square in Central, Hong Kong on Janaury 9, 2023. Photo: Li Jiaxing

Published: 10:55am, 11 Jan 2024Updated: 4:55pm, 11 Jan 2024

Hong Kong stocks jumped, snapping a seven-day slide, after mainland Chinese fund managers added to their purchases as the market reached the lowest level since November 2022. Sentiment improved amid bullish trades in US and Asian equities.

The Hang Seng Index added 1.3 per cent to 16,302.04 on Thursday. The Tech Index rallied 2.2 per cent while the Shanghai Composite Index added 0.3 per cent to climb out from the May 2020 low.

WuXi Biologics surged 8.8 per cent to HK$30.45 and Meituan rallied 5.4 per cent to HK$75.60. Tencent gained 2.6 per cent to HK$287.40 and Alibaba Group advanced 2.2 per cent to HK$70.85. China’s top EV maker BYD added 3.8 per cent to HK$212.40 while peer Xpeng climbed 3.1 per cent to HK$49.95.

Before today, the Hang Seng Index had declined more than 5 per cent following losses in every trading day in the new year. The slump sent the 14-day relative strength indicator closer toward an oversold territory this week, attracting buyers.

“China’s economic recovery, although bumpy, could lead to an improvement in corporate earnings and market sentiment in 2024,” Rickie Jia, a portfolio manager at Pictet in Hong Kong, said in a media briefing on Wednesday. “This, coupled with inexpensive valuations and light positioning among investors, means we remain tactically positive on Chinese equities.”

Mainland funds bought HK$2.6 billion worth of Hong Kong-listed shares on Wednesday, taking their net purchases this year to HK$11.5 billion, according to Stock Connect data. Separately, offshore investors spent US$99 million to pick up A shares over the past two days.