Hong Kong equities spearheaded a rise in Asian markets as China intensified its economic support measures.
The Hang Seng Index ascended as much as 2.2% to potentially mark its ninth consecutive day of advances, setting up its longest streak of gains since January 2018.
The rise was propelled by significant gains in e-commerce leaders, with Alibaba surging 3.5% and JD.com up 4.2%. Chinese markets had been on break for the May Day holidays from May 1-3.
Post-stringent Covid lockdowns in late 2022, China’s government has faced challenges in kick-starting economic growth.
In response, officials have unveiled various targeted initiatives and issued sovereign bonds aimed at enhancing infrastructure investment and stimulating the economy, though outcomes have been varied.
Despite these efforts, China, the world’s second-largest economy, continues to grapple with a severe crisis in its heavily indebted property sector, witnessing declining home prices and sluggish retail sales due to weak domestic demand.
At the end of April, China’s Communist Party declared in its politburo statement its intention to bolster the economy with cautious monetary and proactive fiscal strategies, including adjustments to interest rates and bank reserve requirement ratios (RRR).
Jason Lui, head of APAC Equity and Derivative Strategy at BNP Paribas, noted that the statement reflects a renewed dedication to policies favouring growth and reform.
Vey-Sern Ling, managing director at Union Bancaire Privee, remarked, “The robust performance over the past two weeks likely attracted additional fund inflows driven by a fear of missing out. Despite the recent sharp rally, the valuation of Chinese tech stocks remains substantially below their historical averages and those of their global counterparts.”
