Chinese stocks listed in Hong Kong rose 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 rose 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 3.4% to close at its highest since July 28. Developer Longfor Group Holdings Ltd. surged almost 12% to be the top gainer, while Alibaba Group Holding Ltd. led a climb in internet stocks after regulators approved a plan by billionaire Jack Ma’s Ant Group Co. to raise $1.5 billion for its consumer unit.
Chinese equities are firmly back in favor after jitters over 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 likely to come as early as Wednesday.
“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.
Alibaba’s shares jumped 8.7% and were the biggest contributors to gains in the Hang Seng Tech Index, which climbed 4.6%. Alibaba’s peers also rose as the regulatory approval pointed to Beijing’s softening stance on its mammoth internet sector, besides signaling progress in the government-ordered overhaul of the Ant Group.
Property Boost
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.
China also resumed approvals for private equity funds to raise money for residential property developments, adding to a slew of recent measures aimed at rescuing the ailing real estate sector.
The Hang Seng China Enterprises Index rose 1.9% on Tuesday, marking its best start to any calendar year since 2018. The gauge has climbed more than 40% since the end of 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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Mainland investors bought a net HK$5 billion ($640 million) of Hong Kong stocks via the trading links on Wednesday, the most since Dec. 12, according to data compiled by Bloomberg.
Adding to the optimism 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.
“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.
Hong Kong’s benchmark Hang Seng Index ended 3.2% higher, while the CSI 300 Index on the mainland rose 0.1%.
–With assistance from Aya Wagatsuma, Haidi Lun, Shery Ahn and Chloe Lo.
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