Hong Kong stocks climb to six-month high as global funds stay bullish on China’s recovery outlook, tech regulatory signals

Global funds are picking up Chinese stocks at the fastest pace in at least four years as they prepare for further reopening of the economy
Stock rally this month has added US$800 billion of equity wealth in Hong Kong and mainland bourses

Hong Kong stocks advanced to a six-month high as global funds picked up Chinese stocks at the fastest pace in at least four years, suggesting investors are prepared to overlook short-term economic pain to profit from reopening benefits.

The Hang Seng index rose 0.7 per cent to 21,898.20 at the local noon trading break, heading for the highest close since July 5. The Tech Index added 0.1 per cent and the Shanghai Composite Index jumped 1.4 per cent.

Alibaba Group climbed 1 per cent to HK$113.80, while Tencent Holdings added 0.9 per cent to HK$374.60. China Merchants Bank gained 2.5 per cent to HK$49.10 and HSBC rose 1.6 per cent to HK$56.40. Macau casino operator Sands China jumped 1.2 per cent to HK$29.10 and peer Galaxy Entertainment rose 1.1 per cent to HK$54.05.

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Stocks in Hong Kong and mainland China have added some US$800 billion in market capitalisation this year as China abandoned its zero-Covid policy last month to shore up growth, fanning big capital inflows. China also signalled the rectification of the 14 technology platforms, including Ant Group, was over. Also, slowing US inflation also buoyed optimism the Federal Reserve will temper its rate increases.

“China’s consumption is expected to revive as Covid infections drop and concerns about Fed policy ease,” said Zheng Xiaoxia, an analyst at Hua An Securities. “These factors may reassure investors that holding stocks over the Lunar New Year [later this month] is a good option.”

Chinese stocks gain favour with foreign funds as bullish forecasts attract US$9 billion

Global fund managers spent 60.3 billion yuan (US$9 billion) buying onshore shares through the Stock Connect so far this year, the biggest new year net buying since at least 2018, according to Goldman Sachs. That is equivalent to 70 per cent of US$13 billion net inflows in 2022.

China is due to report several December and fourth-quarter economic data in coming days and investors should expect “weak” signals with industrial production seen stalling and retail sales sliding 10 per cent, according to Goldman’s forecasts. Many workers got sick during the “exit wave” while daily coal consumption suggests activity was sluggish, it added.

Shanghai, China’s biggest commercial city, said it will roll out more relief measures to support small businesses hit hard by past pandemic curbs.

China’s reopening of its economy will boost growth and cushion potential recession setbacks in the US and Europe, Valerie Baudson, CEO of Amundi, Europe’s biggest asset managers, said in an interview.

Three companies started trading in Hong Kong on Monday. Beauty Farm Medical and Health Industry surged 57 per cent to HK$30.35 and Shenzhen Pagoda Industrial jumped 12 per cent to HK$6.26. Gala Technology slumped 14 per cent to HK$5.59.

Other major Asian markets were mixed. Japan’s Nikkei 225 slid 1.3 per cent per cent, while South Korea’s Kospi rose 1 per cent and Australia’s S&P/ASX 200 added 0.9 per cent.