Chinese stocks listed in Hong Kong climbed to a five-month high, buoyed by a rally in tech shares and measures to ease liquidity stress at some of the nation’s too-big-to-fail developers.
(Bloomberg) — Chinese stocks listed in Hong Kong climbed to a five-month high, buoyed by a rally in tech shares and measures to ease liquidity stress at some of the nation’s too-big-to-fail developers.
The Hang Seng China Enterprises Index jumped as much as 2.6% to reach the highest since July 29. Developer Longfor Group Holdings Ltd. was among the biggest gainers, while Alibaba Group Holding Ltd. led a rise in internet firms after Jack Ma’s Ant Group Co. won approval for a $1.5 billion capital plan.
“Regulatory approval for Ant’s capital raise aids market sentiment and improves the prospects of an eventual IPO for the company, which market may be expecting within the year,” said Vey-Sern Ling, managing director at Union Bancaire Privee.
Chinese equities are firmly back in favor after initial fears of a chaotic exit from the Covid Zero policy, as traders seize on signs that the virus outbreak may have peaked in some cities. Investors are also betting that the world’s second-largest economy will receive a boost as the border with Hong Kong reopens, with an announcement set to come as early as Wednesday.
The regulatory approval of Ant Group’s plan to raise funds for its consumer unit signaled progress in the government-ordered overhaul of the financial technology firm.
Builder shares jumped as Bloomberg reported that the Financial Stability and Development Committee told the banking and securities regulators late last week to help shore up the balance sheets of some “systemically important” developers. This adds to a slew of recent measures aimed at rescuing the ailing real estate sector.
“Growth momentum should pick up some time starting in the second quarter of the year,” Tai Hui, APAC chief market strategist at JPMorgan Asset Management, said in an interview with Bloomberg Television. He added that there’s room for US and European investors to return to China and Hong Kong markets.
The Hang Seng China Enterprises Index has climbed more than 40% since reaching a low in October on hopes that a relaxation of Covid restrictions would revive China’s economy. Morgan Stanley, Bank of America Corp. and Credit Suisse Group AG are among the Wall Street banks that are positioned for further gains in Chinese equities.
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Adding to the positive tone was a pledge by China’s Finance Minister Liu Kun reaffirming plans by the authorities to appropriately expand fiscal spending to support the economic recovery.
Alibaba’s shares jumped as much as 8.6% and were the biggest contributor to gains in the Hang Seng Tech Index, which climbed more than 3%. The CSI 300 Index rose 0.5% before erasing the gains.
–With assistance from Aya Wagatsuma, Haidi Lun, Shery Ahn and Chloe Lo.
(Updates with more context, latest prices.)
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