Hong Kong stocks complete fourth week of gain as slower US inflation boosts risk appetite, Fed rate outlook
- Local stocks completed a fourth week of gains as slower US inflation fuelled risk appetite, bets on a less hawkish Fed in 2023
- Rally so far this year has added some US$800 billion of market capitalisation in Hong Kong and mainland bourses
Hong Kong stocks rose, completing a fourth straight week of gains, as cooling US inflation fuelled risk appetite and optimism the Federal Reserve will slow its rate increases this year.
The Hang Seng index added 1 per cent to 21,738.66 at the close of Friday trading. The Tech Index jumped 1.5 per cent, erasing an earlier decline of as much as 0.9 per cent, while the Shanghai Composite Index rallied 1 per cent.
Alibaba Group surged 1.7 per cent to HK$112.70 while Tencent Holdings gained 2 per cent to HK$371.40, with both overturning their losses. HSBC advanced 2.6 per cent to HK$55.50 while carmaker BYD added 1 per cent to HK$230.60. Macau casino operator Sands China appreciated 2.3 per cent to HK$28.75.
The Hang Seng index appreciated 3.5 per cent this week. The new year rally has added some US$800 billion of equity capitalisation across bourses in Hong Kong and mainland China, according to Bloomberg data.
“The market will continue to be supported by two positive factors. One is the improvement of the external interest rate hike environment, and the other is the mainland economy may show a stronger rebound after the first quarter,” said Kenny Ng Lai-yin, a strategist at Everbright Securities. “Stocks still have more room to rise.”
US consumer prices dropped in December for the first time in more than 2.5 years, with inflation easing to 6.5 per cent annually from a 7.1 per cent pace in November, the Labor Department said on Thursday. That boosted bets the Fed will temper its policy tightening this year and help avert a recession. The Fed holds its first 2023 meeting in late January.
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Still, the sharp run-up this year has pushed the Hang Seng index and several index leaders like Alibaba Group, Tencent and carmaker BYD into an overbought zone, based on their relative strength technical readings. The market is prone to an imminent pullback, Ng added.
Elsewhere, some Chinese semiconductor stocks extended a decline. Hua Hong Semiconductor dropped 0.5 per cent to HK$29.40. Analysts at BCA Research said the slump from 2021 peak has more to go as demand weakens.
Markets in Asia-Pacific were mostly stronger. Benchmarks in Australia and South Korea both rose 0.7 and 0.9 per cent respectively, while the Nikkei 225 in Japan retreated 1.3 per cent.