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Hong Kong stocks rebound after soft PMI data triggers stimulus hopes
- Investors hope for ‘meaningful policy measures’ after data showed China’s manufacturing activity contracted in July
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Hong Kong stocks rallied on Wednesday on bets Beijing will deploy more stimulus measures after data released during the day showed a manufacturing slowdown. The city’s biggest lender HSBC jumped to 10-week high on buy-back plan.
The Hang Seng Index jumped 2 per cent to end the day at 17,344.60, clawing its way back from three-month lows. The Tech Index climbed 3 per cent, while the Shanghai Composite Index gained 2.1 per cent, the biggest advance in three months.
HSBC Holdings surged 4.6 per cent to HK$69.95, a 10-week high, after it announced a US$3 billion buy-back plan and better-than-expected earnings. Tencent jumped 2.4 per cent to HK$362.20, NetEase advanced 2.5 per cent to HK$146.20 and Alibaba added 1.4 per cent to HK$77.30, leading gains among tech heavyweights.
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EV maker Li Auto jumped 4.2 per cent to HK$76.70 and BYD added 1.4 per cent to HK$228, after its peer Xpeng expanded its autonomous driving system to take on Tesla.
Factory activity in mainland China contracted for the third straight month, with the official PMI manufacturing index released on Wednesday dropping to 49.4 from 49.5 in June. A reading below 50 indicates contraction in economic activity. The non-manufacturing gauge fell to 50.2 from 50.5 from the previous month, missing the consensus estimate of 50.3.
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The soft PMI readings point to a “further slowdown” in the second half, after the underwhelming growth in the second quarter, Nomura economists including Ting Lu said in a note on Wednesday. That could give Beijing more reasons to strengthen countercyclical policy action, they added.
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