Hong Kong stocks recoup more than US$400 billion as market regains confidence on China support signals

Hong Kong’s stock market recouped more than US$400 billion of market value over three days, after Monday’s slump to October 2022 low
China has signalled more support for its sluggish economy in snap reaction to loss of confidence among global investors

China stock market

Jiaxing Li

Published: 10:44am, 25 Jan 2024

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Hong Kong stocks climbed for a third day from a 15-month low, after China ramped up economic measures to calm investors. The market recouped more than US$400 billion of value this week, after a rout triggered by disappointment over policy inertia.

The Hang Seng Index jumped 2 per cent to 16,211.96 on Thursday, adding to the 6.3 per cent gain over the preceding two days. The Tech Index erased losses to advance 0.9 per cent, while the Shanghai Composite Index rallied 3 per cent, the most since March 2022.

Trading volume reached HK$132 billion (US$16.9 billion), topping the century-figure for a fourth straight day, compared with the average daily turnover of HK$102 billion in the past 12 months. It also marked the busiest day for the city’s stock exchange in more than a month.

Tencent rose 3.2 per cent to HK$290.80, JD.com strengthened 3.4 per cent to HK$93.50 and Baidu appreciated 1.6 per cent to HK$106.80. AIA closed 3.4 per cent higher at HK$65.05, while HSBC added 0.8 per cent to HK$60.40. Longfor surged 8.1 per cent to HK$9.61 and peer developer China Resources Land gained 5.7 per cent to HK$24.30.

A summary of China’s recent monetary policy measures. Source: Goldman Sachs, January 2024

The central bank on Wednesday said it would allow developers to pledge commercial properties for bank loans to help repay their existing debts, easing funding restrictions. The move is in addition to the impending banks’ reserve-ratio cut on February 5, which will unleash 1 trillion yuan (US$140 billion) of liquidity into the system to spur lending.

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Those measures, preceded by Premier Li Qiang’s order on Monday to help stabilise stock prices and calm jitters, are “steps in the right direction,” according to Rene Buehlmann, global CEO of investments at UK fund manager Abrdn.

“It’s clear that markets want policymakers to bring out the big guns to support underlying fundamentals,” said David Chao, global market atrategist for Asia-Pacific ex-Japan at Invesco. “Ultimately, what is going to get fundamentals back on track is meaningful improvement in confidence and sentiment.”

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The Hang Seng Index has now risen 5.9 per cent this week, set for the best run since the opening week of 2023. The rebound from the lowest level since October 2022 has expanded the total market capitalisation of stocks in Hong Kong to US$4.69 trillion, according to Bloomberg data, versus US$4.29 trillion on Monday.

Before the rescue, stocks in Hong Kong, Shanghai and Shenzhen had lost a combined US$1 trillion in the new year, matching all of the sell-off in 2023. Hong Kong’s stock benchmark had slumped more than 12 per cent in its worst start to a year since 2016.

Elsewhere, Alibaba added 1 per cent to HK$73.35, extending the 7.3 per cent rally on Wednesday. Its South Asian online shopping platform Daraz Group has named a new CEO in a push to boost its international businesses. A credit scoring platform Qiantang, backed by Alibaba’s fintech affiliate Ant, also moved closer to get a licence after two-year wait.

Other key Asian markets traded higher. South Korea’s Kospi and Japan’s Nikkei 225 both gained less than 0.1 per cent, and Australia’s S&P/ASX 200 added 0.5 per cent.