SINGAPORE: Hong Kong stocks rose more than 2% on Friday, still cheering China’s massive economic stimulus proposals, while other global markets were skittish about escalating tensions in the Middle East.
Asian stocks fell and oil prices were headed for their sharpest weekly gain in more than a year on those tensions and as investors waited for a US jobs report later in the day. Chinese ADRs fell more than 2% overnight.
Mainland markets are closed for a week-long National Day break. They had rallied strongly on Monday, ahead of the holiday, as retail investors rushed to buy stocks after Beijing announced its most aggressive stimulus measures since the pandemic, ranging from outsized rate cuts to fiscal support, in an attempt to shore up its ailing economy.
Chinese H-shares listed in Hong Kong, the Hang Seng China Enterprises Index rose 2.55% to 8,114.23, while the Hang Seng Index was up 2.2% at 22,600.62. The Hang Seng Index is up 22% since Sept. 24, when Beijing kicked off rate cuts, and seemed set to overtake a late-January 2023 peak it hit earlier this week.
It is now up roughly 32% for the year, and has dethroned Taiwan to become Asia’s best-performing stock market. Particularly in a boost for stocks, the People’s Bank of China (PBOC) introduced two fresh tools to shore up the capital market, one of which includes a swap programme allowing funds, insurers and brokers easier access to funding.
That lit a fire under beaten-down Chinese equities that had been languishing near multi-year lows as recently as early this month, as investors fretted over China’s growth prospects.
“While the details of the scheme have not even been published yet, the announcement effect has been powerful,” Jefferies analyst Chrisopher Wood said. “This is because mainland investors now assume that a rising stock market has become part of the PBOC’s KPI, whereas before this was strictly the responsibility of the CSRC, China’s securities regulator.”
China’s blue-chip CSI 300 Index soared 25% over five days from Sept. 24, its strongest gain for such a period on record. The CSI 300 and the Shanghai Composite Index also notched their biggest single-day percentage gains on Sept. 30.
The top gainer among H-shares was Semiconductor Manufacturing International Corp, up 22.46%. A sub-index of the Hang Seng index tracking energy shares rose 2.4% while the IT sector rose 3.3%.
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