HONG KONG: Hong Kong stocks rose on Wednesday as hopes of Chinese authorities coming to the rescue of a battered market and news of Jack Ma scooping up Alibaba Group shares lifted market sentiment.
The Hang Seng Index (HSI) jumped 2.4% and the Hang Seng Tech Index was up as much as 3.7% in early trade, driven by the gains in benchmark heavyweight Alibaba, before ceding some ground.
By midday, the HSI was up only 0.8%.
The market mood remained fragile, reflected in China A-shares, with the blue-chip CSI 300 Index edging down 0.45% and hovering near a five-year low it struck last week.
The Shanghai Composite 0.15%.
Both had eked out modest gains in the previous session. Tuesday’s light rebound was spurred by a news report and a pledge by China’s cabinet flagging support for equity markets.
Both the HSI and the Hang Seng Tech Index had plunged on Monday to 15-month lows in a broad selloff of Chinese stocks driven by worries over the economy and concerns 2024 will not bring a turnaround.
Hong Kong shares of Alibaba surged over 6% in early trade to their highest since Jan. 5, after the New York Times reported co-founder Jack Ma and Chairman Joe Tsai bought shares worth millions of dollars in the Chinese e-commerce giant in the fourth quarter.
The company’s US-listed shares rebounded nearly 8% on Tuesday.
China’s cabinet said on Monday it would take forceful and effective measures to stabilise market confidence.
Hong Kong stocks open slightly higher
Bloomberg News, citing unidentified sources, said on Tuesday policymakers were seeking to mobilise about 2 trillion yuan ($279 billion), mostly from offshore accounts of state enterprises, to fund equity buying through a stock connect link.
Kamil Dimmich, partner and portfolio manager at North of South Capital EM fund, based in London, said he was not sure such a package would help.
“That’s not a solution to anything. I think if it was combined with some structural reforms or something that people were really looking out for you could turn the tide,” he said.
“On its own, you’ll get a spike, you’ll get some sort of day one reaction, but it’s not a long-term solution.” Local analysts have been have been calling for the set up of a rescue fund since last year.
The potential rescue fund, if true, is a boost to sentiment and liquidity but unlikely to solve core issues, including problems in the economy and corporate earnings, Morgan Stanley analysts led by Laura Wang said in a note.
“We think coordinated macro stimulus actions are necessary for a sustainable recovery,” they said.
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