Hong Kong Stocks Hit 10-Month High After China's Property Rescue Measures

Hong Kong stocks surged to a 10-month high as Beijing's latest initiatives to rescue the struggling property sector lifted market sentiment. The Hang Seng Index increased by 0.5 percent to 19,650.18 during the local noon trading break, marking the highest level since July 31 of last year. Concurrently, the Tech Index rose by 0.6 percent, and the Shanghai Composite Index climbed 0.4 percent.

Electric vehicle manufacturer BYD saw a 2.2 percent increase, reaching HK$227.60, while fellow automaker Li Auto advanced by 3.4 percent to HK$99.15. E-commerce platform JD.com gained 3 percent to HK$138.20, and gaming company NetEase increased by 1.7 percent to HK$165.50. Sportswear manufacturer Li Ning experienced a significant jump of 6.4 percent to HK$23.40, and Macau casino operator Galaxy Entertainment rose by 4.9 percent to HK$41.85.

On Friday, the People’s Bank of China announced some of its most aggressive measures to date to stimulate the property sector. These measures include a 300 billion yuan funding to clear excess housing inventory, reducing the minimum mortgage down payment requirements, and removing the national floor for mortgage interest rates.

Nomura economists, including Ting Lu, commented in a note on Monday, “We believe Beijing is headed in the right direction with regard to ending the epic housing crisis.” They added that the markets would need to exercise more patience as the cleanup process would be challenging.

Before Monday's gains, Hong Kong's benchmark index had risen for four consecutive weeks, marking the best winning streak since the opening month of 2023. This surge added approximately US$350 billion in market capitalization to the city's exchange, according to Bloomberg data.

Despite the recent impressive gains, some investors advise caution, noting that any potential upside will be influenced by interest rate movements, corporate earnings, and subsequent government fiscal actions. Analysts at CICC noted over the weekend, “For policies to be effective, especially in terms of fundamentals, the overall intensity and speed of implementation are crucial. Given the current uncertainty, we are reluctant to completely abandon the barbell strategy and fully shift to cyclical sectors.”

Additionally, the compiler of Hong Kong’s Hang Seng Index announced it will add handset assembler BYD Electronic International to the benchmark, replacing Country Garden Services Holdings in its latest quarterly review.

Other major Asian markets also saw gains. Japan’s Nikkei 225 climbed by 0.9 percent, South Korea’s Kospi added 0.6 percent, and Australia’s S&P/ASX 200 increased by 0.7 percent.

By fLEXI tEAM