Hong Kong stocks rebound as funds bet on China stepping up support, intervention to rebuild market confidence

Hang Seng Index overcame early jitters to post a second day of gain in the Year of the Dragon

Fund managed by Michael Burry of the Big Short fame has loaded up on Alibaba, JD.com last quarter, according to 13F regulatory filing

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A woman checks her mobile phone near screens displaying the Hang Seng Index and stock prices outside the Exchange Square in Hong Kong on January 23. Photo: Reuters

Published: 10:35am, 15 Feb 2024Updated: 4:35pm, 15 Feb 2024

Hong Kong stocks erased losses to chart a second day of winning in the Year of the Dragon, as local fund managers bank on Beijing to deliver stronger measures to help repair investor confidence. Michael Burry of the Big Short fame, topped up his holdings in Alibaba Group and JD.com last quarter.

The Hang Seng Index rose 0.4 per cent to 15,944.63 on Thursday, adding to Wednesday’s 0.8 per cent jump. The Tech Index overturned a 0.7 per cent loss to advance 0.9 per cent, following a 2.2 per cent rally a day earlier. Financial markets in mainland China are closed for this week for the Lunar New Year holiday.

Li Ning surged 5.6 per cent to HK$20.25, and Alibaba Group gained 0.7 per cent to HK$71.30 while e-commerce rival JD.com jumped 2.4 per cent to HK$91.25. EV maker Li Auto gained 0.2 per cent to HK$119.80, while appliances maker Haier Smart Home strengthened 0.6 per cent to HK$23.75.

“China has the tools to manoeuvre and be more proactive in managing the risk” in the economy, said Liu Minyue, investment specialist for Asia and Greater China equities at BNP Paribas Asset Management. “Even if China is not fully out of the woods, we believe that risk-reward is turning more favourable.”

Investors want to see more action to shore up the economy and markets, according to Pictet Asset Management and Saxo Markets, as recent market intervention and policy support will not be sufficient to sustain the turnaround after a US$5 trillion rout over the past three years.

Burry, who profited from shorting the US housing market in 2008, added to wagers on Alibaba Group and JD.com, according to his firm’s US regulatory filing. Scion Asset Management made Alibaba, the owner of this newspaper, its top holding after boosting its stake by 50 per cent in the December quarter.

Hong Kong’s finance chief Paul Chan Mo-po said the market outlook is promising as the Hang Seng Index has never had a losing year in a Year of the Dragon. China’s improving economy and likely rate cuts later this year “will bring a positive atmosphere to investment sentiment and the asset market”, he said on Wednesday.