Hong Kong stocks rise on China housing policy support measures, US rate-cut bets

Posted by Admin May 16, 2024 Bussiness

Hong Kong stocks rose to nine-month highs as markets reopened after a public holiday with sentiment boosted by new meaningful measures by local Chinese government to shore up the property market and after US inflation data stoked hopes of an early interest-rate cut.

The Hang Seng Index advanced 1.4 per cent to 19,333.21 at 11.30am local time, heading for its highest close since August 7. The Hang Seng Tech Index climbed 0.9 per cent and the Shanghai Composite Index added 0.5 per cent.

Hong Kong stocks have been on a tear in recent sessions after China ramped up policy support for the battered housing market and speculations abounded about dividend tax relief, driving the Hang Seng Index as the best performance among major stock benchmarks worldwide last month.

In the latest effort to stem the downturn and reduce inventories, the city of Hangzhou said that it would buy existing homes to rent them as affordable housing and Hefei would give homebuyers subsidies equivalent to 2 per cent of the values of purchases homes. Meanwhile mainland buying of Hong Kong stocks has accelerated on speculation that the 20 per cent dividend tax on shares available in the Stock Connect programme, will be removed.

Signage for Tencent Holdings Ltd. outside the company’s headquarters building in Shenzhen, China, on Wednesday, April 17, 2024. Tencent Holdings’ shares jumped 4.7 per cent to HK$400 after first-quarter profit surged 62 per cent to beat the consensus estimate. Photo: Bloomberg

“Return of foreign inflows is driving Hong Kong stocks as the risk appetite for Chinese assets increases,” said Melody Lai, an analyst at SPDB International. “The bargain buying trade is still at play, as valuations in many sectors remain depressed indicating more upside for stock prices.”

Broader gains in Asia were triggered after core inflation data in the US sparked expectations the US central bank will cut its policy interest rate in September and December. Japan’s Nikkei 225 and South Korea’s Kospi both climbed 0.8 per cent, while and Australia’s S&P/ASX 200 added 1.8 per cent. The S&P 500 index rose to a record in overnight trading.

In the property sector, Longfor Group Holdings soared 12 per cent to HK$13.98 and peer China Resources Land gained 4 per cent to HK$32.05. Tencent Holdings jumped 4.2 per cent to HK$398 after first-quarter profit surged 62 per cent to beat the consensus estimate.

China property: Hangzhou mulls buying unsold homes to boost market

Investors will parse corporate earnings and economic data both today and tomorrow as these will provide future direction for markets. Meituan, JD.com and Baidu, the three bellwether companies on the Hang Seng Index, are due to release results on Thursday. China’s statistics bureau is expected to disclose April data on industrial production, retail sales and investments on Friday.

Meituan gained 2.6 per cent to HK$125.10 and JD.com added 1.5 per cent to HK$159.10, while Baidu slipped 0.5 per cent to HK$108.70.

Alibaba Group Holding slumped 3 per cent to HK$80.25 after the result for the first quarter fell short of projections.

Marketingfore Management, a cloud-based software developer, jumped 17 per cent to HK$51.15 on the first day of trading in Hong Kong.