Hong Kong Stocks Soar to Three-Week High on Chinese Policy Pledge

Hong Kong stocks surged to a three-week high following a pledge by Chinese Premier Li Qiang to relax policies and increase imports, underlining Beijing's commitment to strengthening relationships with major trading partners. The Hang Seng Index rose by 1.7% to 17,962.64, marking its highest level since October 12. The Tech Index saw an impressive rally of 3.7%, while the Shanghai Composite Index also gained 0.9%.

Prominent Chinese tech giants reaped the benefits of the positive market sentiment, with Tencent rising by 2.8% to HK$311.20, Alibaba Group advancing 2% to HK$84.50, and e-commerce firm JD.com climbing 3.7% to HK$106.90. The market rally was broad-based, with insurance giant AIA witnessing a 3.2% increase to HK$73.15, property developer Longfor surging by 6.2% to HK$12.70, and Sunny Optical Technology rallying by 6% to HK$72.95.

Premier Li Qiang, speaking at the China International Import Expo in Shanghai, revealed China's plans to further ease policies and increase purchases from foreign businesses. He emphasized the significant purchasing power represented by China's 400 million middle-income consumers, making them a substantial force for trade partners.

The surge in Hong Kong's Hang Seng Index was preceded by last week's rise, attributed to the Federal Reserve's decision to maintain its key interest rate, as well as positive developments in China's services sector, which helped offset a surprise decline in manufacturing. Additionally, the city's monetary authority, celebrating its 30th anniversary, held its base rate steady, and local banks refrained from raising mortgage rates.

Shen Chao, a strategist at HSBC Jintrust Fund Management in Shanghai, noted that "confidence is recovering with the expectations for the economy to improve," citing the ramped-up fiscal policy and continued loose monetary policy as contributing factors.

The Hong Kong market rally is in line with a broader trend of optimism driven by a significant weekly rally in the S&P 500 Index in New York. This surge was buoyed by strong corporate earnings and declining Treasury yields, fostering expectations of an end to the Federal Reserve's rate-hiking cycle.

Other Asian markets also experienced gains on Monday, with South Korea's Kospi surging by 4.1% after the nation imposed a ban on short selling of stocks. Japan's Nikkei 225 climbed by 2.4%, and Australia's S&P/ASX 200 added 0.4%.

The positive market sentiment reflects growing confidence in the global economic outlook, driven by a combination of factors including supportive central bank policies, robust corporate performance, and increased international trade activity.

By fLEXI tEAM