Hong Kong stocks advance on more China measures to support market, Evergrande liquidation shocker limits rally

China banned key shareholders from lending their stocks during lock-up period to stabilise stock market

Hong Kong’s High Court sent China Evergrande into liquidation, citing its lack of efforts or progress to reorganise and repay creditors

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Stock indices and prices outside the Exchange Square in Central, Hong Kong on January 19, 2024. Photo: Xiaomei Chen

Published: 10:58am, 29 Jan 2024Updated: 5:07pm, 29 Jan 2024

Stocks in Hong Kong jumped after China’s market regulator suspended securities lending of restricted shares listed on mainland exchanges to stabilise stock prices, adding to a slew of measures to stem a market rout. China Evergrande sank after losing a court case to fend off liquidation.

The Hang Seng Index gained 0.8 per cent to 16,077.24 on Monday, after surging as much as 1.9 per cent. The benchmark rebounded 4.2 per cent last week from a 15-month low. The Tech Index rose 0.5 per cent, while the Shanghai Composite Index weakened 0.9 per cent.

Alibaba Group advanced 2.4 per cent to HK$72.60, e-commerce peer JD.com gained 2.2 per cent to HK$93.35 and Baidu jumped 2.1 per cent to HK$105.10. China Unicom rallied 2.4 per cent to HK$5.45, Sinopec gained 2.5 per cent to HK$4.16 and PetroChina added 1.4 per cent to HK$5.79.

Longfor added 0.3 per cent to HK$9.47, and China Resources Land jumped 2.9 per cent to HK$24.90 after the city of Guangzhou in southern Guangdong province lifted restrictions on purchases of large homes.

The China Securities Regulatory Commission said it will bar key shareholders from lending their stock under lock-up or restrictions from Monday. The decision, announced over the weekend, came after China’s central bank last week surprisingly cut banks’ reserve ratio to shore up market sentiment.

“The market is still in a rebound phase driven by sentiment recovery,” Kevin Liu, strategist at CICC said in a report on Sunday. “A true trend reversal requires more targeted policy catalysts”, he added.

Still, Hong Kong’s stock benchmark index has declined about 4.2 per cent so far this month, heading for the worst January since the 6.7 per cent slide in the first month of 2020. A court judgment sending indebted Chinese developer Evergrande into liquidation tempered stock gains.