Hong Kong Stocks Surge on Speculation of Eased Property Curbs
Hong Kong stocks soared to a seven-week high on Wednesday, driven by a surge in property developers’ shares amidst speculation that the government will remove more curbs to boost the struggling industry. Mainland developers like Longfor and China Resources Land led the gains, with increases of 9.5% and 4.9% respectively. Other major developers including Sun Hung Kai Properties, Henderson Land, and New World Development also saw substantial increases. The Hang Seng Property Index rose by 3%, reaching a one-month high.
Tech stocks also rallied, with Alibaba Group, Tencent, and Meituan experiencing gains. The Hang Seng Index increased by 1.6% to reach its highest level since January 5. The Tech Index rose by 2.7%, while the Shanghai Composite Index climbed by 1%.
China has vowed to improve policy transparency, and state-run funds have been more active in the market. However, the benchmark index’s rally was tempered by a 3.8% slump in HSBC shares, following a decline in net interest margin and credit losses in its 2023 results.
Financial Secretary Paul Chan Mo-po is expected to unveil measures to kick-start the local economy in the upcoming budget announcement on February 28. Some industry veterans are urging the removal of market hurdles to address the decline in asset values.
Stewart Leung, chairman of the Real Estate Developers Association, revealed discussions with Chan, highlighting the government’s awareness of market concerns and their economic impacts.
Mainland China’s stocks also saw gains, supported by increased intervention from the “national team” to stabilize stock prices. The Communist Party’s Central Financial Commission is committed to enhancing regulatory predictability and reducing restrictive actions.
In contrast, markets in Japan, Australia, and South Korea traded mostly lower, following the weaker performance of US equities overnight. The Nikkei 225 in Japan fell by 0.3%, the S&P ASX 200 in Australia declined by 0.7%, and the Kospi Index in South Korea lost 0.2%.
Analyst comment
Positive news: Hong Kong stocks soared to a seven-week high, driven by property developers’ shares surge and speculation of more government support. Tech stocks also rallied. The market is expected to continue its upward trend, supported by government intervention and measures to jump-start the economy.
Market analysis: The market is likely to continue its upward trajectory in the short term as government support boosts investor confidence. However, the decline in HSBC’s performance could limit the benchmark index’s rally. Other Asian markets may experience slight declines, influenced by weaker performance in US equities.
