Hong Kong stocks extended their rally to a fourth day on Friday with record trading volume, as Chinese mainland authorities’ fresh measures to stimulate the economy boosted market confidence.
The benchmark Hang Seng Index surged 3.55 percent, or 707 points, to close at 20,632 points on Friday, the highest level in nearly one and a half years. The HK$445 billion ($57.24 billion) turnover marked an all-time high.
The Hang Seng Tech Index leaped 5.8 percent, to 4,453, while the Hang Seng China Enterprises Index jumped 3 percent, to 7,300.
The mainland e-commerce giant JD surged 9.7 percent to HK$152, and Alibaba Group gained 4.9 percent, to HK$102.5. Food delivery platform Meituan jumped 8.1 percent, to HK$164.6, while electric-vehicle maker BYD rose 5.9 percent, to HK$275.8.
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Lawmaker Ambrose Lam San-keung said Hong Kong’s record-breaking trading volume on Friday was partly driven by foreign fund managers’ joining the buying spree, and major investors’ closing out their short positions in Hong Kong stocks.
The trading frenzy came after the People’s Bank of China announced on Friday that it was cutting the reserve requirement ratio for all banks by 50 basis points, which the central bank said will “create a favorable monetary and financial environment for the country’s stable economic growth and high-quality development”.
A day earlier, a Politburo meeting chaired by President Xi Jinping pledged to invigorate the capital market, stabilize the real estate market, and offer support to the private sector.
The country will introduce a raft of measures to promote the market entry of medium- and long-term capital, clearing obstacles for social security, insurance and wealth management funds to invest in the market.
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Efforts will be made to stabilize the property market and reverse its downturn; adjust the policy of housing purchase restrictions; lower interest rates on existing mortgages; promptly improve land, fiscal, tax and financial policies; and promote the establishment of a new model for real estate development, according to the meeting.
The 24-member high-level body also highlighted the importance of rolling out a private economy promotion law and fostering a favorable environment for the development of the nonpublic sector.
Mofiz Chan, chairman of the Hong Kong Securities and Futures Professionals Association, said that the index’s topping the 20,000 level marks a significant milestone for the Hong Kong stock market, signaling investors’ renewed confidence in the international financial hub’s fundraising pool.
”The shift in market sentiment has a significant impact on the stock market. When investor confidence rebounds, it often triggers more buying activity, creating a positive feedback loop that further drives up the stock index,” Chan said.
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The Chinese mainland’s economic indicators and market conditions will be pivotal factors to drive the upward trend, Chan added.
However, he warned, “While the surge above 20,000 is promising, investors should remain cautious. Potential risks include geopolitical tensions, regulatory changes, and global economic uncertainties.”
Earlier this week, the country’s central bank unleashed a flurry of stimulus measures aimed at shoring up the economy, including cutting the cost of its medium-term loans to banks, lowering mortgage rates of existing housing, reducing the down payment ratio for homebuyers, shaving banks’ reserve requirement ratio by 50 basis points, and injecting an 800 billion yuan ($114.1 billion) package of liquidity support for stocks.
tianyuanzhang@chinadailyhk.com
