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Screens showing the index and stock prices outside Hong Kong Exchange Square (HKEX) in Central. Photo: Sun Yeung
BusinessMarkets

Hong Kong stocks rebound after China data raises hopes of policy support

  • Data showed retail sales growth slowed in year-on-year terms in January-February and property investments struggled but industrial production beat expectations
  • Investors further pared back their expectations of a US interest rate cut in May ahead of March’s Federal Reserve decision later this week where no change is expected
Hong Kong stock market
Jiaxing Li
Jiaxing Li
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Hong Kong stocks gained as investors banked on more policy easing after a batch of government data showed China’s economic recovery was still tentative. However, sentiment remained cautious ahead of the US Federal Reserve meeting later this week.

The Hang Seng Index inched up 0.1 per cent to 16,737.12 at close on Monday, after losing as much as 0.5 per cent in the morning session. The Tech Index added 1.3 per cent while the Shanghai Composite Index added 1 per cent.

E-commerce giant JD.com added 3.3 per cent to HK$108 and Tencent jumped 2.2 per cent to HK$290. EV maker BYD advanced 3.9 per cent to HK$218.40 and peer Xpeng jumped 7.1 per cent to HK$40.50 after their plans to address the mass market. Wuxi Apptec jumped 4 per cent to HK$42.65 before its earnings release, due later today.

Data released on Monday painted a mixed picture about the recovery in the world’s second largest economy. Retail sales growth slowed in year-on-year terms in January-February but industrial production jumped 7 per cent compared with the same period last year beating expectations, according to National Bureau of Statistics.

Property investment continued to struggle and fell by 9 per cent in January and February, despite an acceleration in property policy easing. Longfor declined 4.6 per cent to HK$10.06 and China Resources Land lost 2 per cent to HK$24.70, leading the Hong Kong-listed mainland developers lower.

“Economic momentum has remained soft in the first two months of the year, necessitating additional need for stimulus,” said Lynn Song, ING’s chief economist for Greater China.

“A meaningful rebound is still possible even when economic conditions are poor,” said Lloyd Chan, investment strategist at Standard Chartered. Targeted fiscal and monetary policy are likely to help limit downside risks, he added.

Elsewhere, investors have also virtually ruled out a US interest rate cut in May ahead of the Federal Reserve’s March decision, where there is a 99 per cent probability of steady rates. Data from CME Group shows markets are now pricing in a 94 per cent chance of steady rates, compared with 70 per cent a month ago.

Asian stocks were broadly higher. Japan’s Nikkei 225 jumped 2.7 per cent on bets that the central bank will end its negative interest rate policy soon. South Korea’s Kospi added 0.7 per cent but Australia’s S&P/ASX 200 was flat.

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