Zina Kumok
Updated on: October 16, 2024 6:18 am GMT
Recently, the financial markets in Hong Kong experienced a remarkable surge, largely driven by renewed investor confidence spurred by China’s latest stimulus measures. The Hang Seng Index jumped 4.2 percent, reaching 19,924 points, marking three consecutive days of gains. This significant uptick came amid substantial buying activity from mainland investors.
Record Investment Flows
On a single day alone, Southbound investors purchased HK$12.1 billion (US$1.6 billion) worth of local shares. This marked the largest single-day total in over six months, according to data from the stock exchange. As a result, overall turnover in the Hong Kong stock market surged to HK$505.8 billion, setting a record high.
So far this year, mainland investors have invested an impressive US$64 billion into Hong Kong stocks. This figure already surpasses last year’s total of US$42 billion, and it signals the potential for the largest inflow since 2020, when investments soared to US$87 billion, according to Goldman Sachs.
Optimism in Market Predictions
Analysts are showing optimism about future market conditions. Angus Chan, head of Hong Kong strategy at UBS Investment Bank, noted, “We see more upside coming from a lower interest rate, weaker US dollar, stronger than expected policy stimuli, and improved earnings revisions.” He believes the Hang Seng Index could close the year at 22,100, with the MSCI Hong Kong Index projected to reach 9,600, representing increases of 7% and 1% over previous forecasts, respectively.
- UBS favors stocks with high yields.
- Companies in the travel sector are also seen as key investment opportunities.
Market Performance Highlights
The Hong Kong stock market saw notable performances across various sectors. The Hang Seng Index closed up 795 points, or 4.15 percent. Mainland property stocks were particularly robust, with Longfor (0960) soaring 28.32 percent, making it the best-performing stock in the Hang Seng Index. Other significant movers included:
- China Resources Land (1109): Up 21.51 percent.
- China Overseas Land & Investment (0688): Increased by 15.67 percent.
Impact of Government Stimulus
The recent spike in Hong Kong’s stock prices is closely linked to China’s stimulus strategy aimed at revitalizing its economy. To stimulate domestic consumption, Shanghai plans to distribute 500 million yuan (HK$554.49 million) in consumption vouchers across various sectors, notably dining. Following this announcement, stocks related to entertainment and leisure surged significantly:
- Haidilao International (6862): Up 17.99 percent.
- Li Ning (2331): Increased by 15.03 percent.
- ANTA Sports Products (2020): Rose 13.98 percent.
- China Mengniu Dairy (2319): Gained 11.99 percent.
Challenges in Other Sectors
While many stocks flourished, some sectors faced challenges. Softening oil prices put pressure on oil and petrochemical stocks. CNOOC (0883) became the worst-performing blue-chip stock, dropping 6.5 percent. Other notable declines included:
- PetroChina (0857): Down 2.04 percent.
- China Petroleum and Chemical (0386): Declined by 1.24 percent.
Looking Ahead
The renewed activity in Hong Kong’s stock market is indicative of a broader shift as China implements more aggressive measures to combat economic weakness. The People’s Bank of China (PBOC) has cut key interest rates in a bid to stimulate borrowing and consumption. These moves include:
- 20 basis points cut in the 7-day reverse repo rate.
- 30 basis points reduction in the Medium-term Lending Facility (MLF).
- Lower mortgage rates on existing loans.
- 500 billion yuan liquidity support targeted at Chinese stocks.
As the economic landscape evolves, both investors and analysts will be watching closely for signs of sustained growth. For more detailed insights on market strategies and trends, you can refer to financial platforms like Goldman Sachs and UBS.
Recently, Hong Kong stocks have been going up, which shows that investors are feeling more confident. This change is influenced by some helpful support from the Chinese government. As the market continues to grow, important areas are likely to change even more, depending on how the economy is doing and how investors feel.
