Hong Kong Stocks Reach 32-Month High as Wall Street Banks Boost China Market Confidence

Hong Kong stocks extended their three-week rally to hit a 32-month high, with the Hang Seng Index climbing 1.2 percent to 22,997.26 by the noon trading break on Monday, marking its highest level since February 2022. The Tech Index surged by 2.4 percent. This rally comes as mainland Chinese markets are set to resume trading on Tuesday following the “golden week” holiday.

Top performers in the Hong Kong market included Alibaba Group Holding, which rose 0.8 percent to HK$114.80, and electric car manufacturer BYD, which advanced 3.4 percent to HK$316. Semiconductor Manufacturing International Corporation (SMIC), China’s leading chipmaker, saw a dramatic rise of 17.9 percent to HK$32.25, while Macau casino operators also posted significant gains—Sands China jumped 9.3 percent to HK$22.40, and Galaxy Entertainment rose 8.8 percent to HK$43.10.

This bullish sentiment follows recent endorsements from Citigroup and Goldman Sachs, which have joined other Wall Street banks, such as Morgan Stanley and UBS, in raising their targets for China’s key indices. These upward revisions were sparked by Beijing’s surprise policy announcements, which have fueled a bull run in Chinese equities.

“Put all in China for policy combo, the US rate cut, and attractive valuations,” said Pierre Lau, China equity strategist at Citigroup, in a note issued on Monday. Lau indicated that Beijing is expected to introduce more economic stimulus measures than the market currently anticipates, hinting at a potential 3 trillion yuan (US$427.5 billion) consumption support package. Citigroup subsequently raised its target for the Hang Seng Index by 24 percent to 26,000 by mid-2025 and boosted the MSCI China Index target by 27 percent to 84 in the same timeframe.

Goldman Sachs also upgraded Chinese stocks to “overweight,” citing Beijing’s “coordinated and forceful” policy moves, which they believe will mitigate downside growth risks. Strategists, including Kinger Lau, emphasized, “If not now, when? Policy U-turn provoked re-rating trades have seldom stopped there.” Goldman increased its 12-month targets for the MSCI China Index to 80 and the CSI 300 Index to 4,600, signaling an expected return of 15 to 18 percent.

Since China’s policy package announcement on September 24, the Hang Seng Index has surged by over 24 percent, adding more than US$1 trillion in market value to Hong Kong’s stock market, according to Bloomberg data. Goldman Sachs noted that Chinese equities experienced record-high monthly buying in September, driven by these recent policy measures.

Investors are now speculating that further economic stimulus is on the horizon as China continues efforts to boost its market. The National Development and Reform Commission will hold a press conference on Tuesday to discuss the implementation of the policy package and economic growth, which is expected to further strengthen the positive momentum initiated by the central bank’s measures two weeks ago.

In other sectors, Sun Hung Kai Properties gained 1.4 percent to HK$91.05, while CK Asset Holdings rose 3.8 percent to HK$36.90, with both local developers benefiting from strong demand for new home sales over the weekend, reflecting improved market sentiment.

Meanwhile, other major Asian markets also trended upwards on Monday. Japan’s Nikkei 225 Index rallied 2.2 percent, Australia’s S&P/ASX 200 Index added 0.7 percent, and South Korea’s Kospi gained 1.5 percent.

By fLEXI tEAM