BEIJING: As the market neared a 13-year low, funds from mainland China increased their holdings, prompting a rally in Hong Kong stocks, allaying concerns about rising interest rates and an upcoming slowdown in the global economy.
The rally was fueled by more rumors about the end of Beijing's zero-Covid policy. The Hang Seng index rose 5.7% to 16,213.68 on a local afternoon trade break, the highest since October 2011.
The Shanghai Composite Index gained 2.1% while the Tech Index gained 7.7%. In New York, an index tracking Chinese stocks listed in the US rose 3.2% overnight.
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Tencent and Alibaba Group Holding both experienced gains, with Tencent jumping 12.4 percent to HK$70.60 and 12% to HK$242.20, respectively.
JD.com is up 12.4% to HK$171.50, and Meituan is up 8.5% to HK$153.50. Macau casino operator Sands China saw a rise of 6.5% to HK$17.26. To HK$16.30, the Tracker Fund grew 5.7%.
Stock Connect data shows mainland funds have bought HK$29 billion (US$3.7 billion) of shares listed in Hong Kong so far this week. According to Goldman Sachs, they were net buyers of HK$28.1 billion last week, the largest inflow in the previous year.
According to Dicky Wong, executive director of Kingston Securities, “The market is now at a 13-year low and many mainland investors are fishing Hong Kong to find great value.”
The Hang Seng index rose nearly 9% for the week, its biggest five-day gain since October 2011, thanks to today's rally, which helped ease the benchmark's decline this year to nearly 29%.
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In an unconfirmed transcript from a conference held behind closed doors in Hong Kong, a former state health official predicted that Beijing's zero-Covid policy would end soon. Stock gains earlier this week were also driven by a related rumor on the subject.
According to Hong Hao, a market strategist at Grow Investment Group, “Hong Kong is deeply undervalued, and the good news [on the zero-Covid policy] will lift sentiment very high and rally the troubled stock market bullish in the short term. "
The Hong Kong Monetary Authority (HKMA) summit, which brings together international financiers, ended on Thursday. Overseas participants, such as JP Morgan Chase, Citigroup and MSCI, were praised for their unrestricted participation as proof that the city can leave its COVID-19 restrictions and get back to business.
After the HKMA raised its base rate on Thursday, major commercial banks today started raising their key rates to support their lending margins. HSBC rose 2.5% to HK$41.30 and Bank of China (Hong Kong) rose 2% to HK$2.57.
Asia-Pacific markets reported multiple results. The S&P/ASX 200 index in Australia gained 0.3%, while the Nikkei 225 index in Japan declined 2% and the Kospi index in South Korea lost 0.2%.
