The Hong Kong stock market rebounded on Tuesday after a record plunge as the benchmark Hang Seng Index climbed by 1.51 percent, reclaiming the 20,000-point threshold, but uncertainty lingers.
The Hang Seng China Enterprise Index, the barometer of mainland-based company performance, rose 2.31 percent to close at 7,430 points, while the Hang Seng Tech Index, the city’s technology stock gauge, increased 3.79 percent to 4,568 points.
Along with China's financial regulatory authority’s measure of stabilizing the capital markets on April 8, Central Huijin Investment, an arm of China’s sovereign wealth fund, stated its entry into A-share ETFs, buoying market sentiment.
In addition, some State-owned companies and private enterprises announced an increase in their stock holdings in both the mainland and Hong Kong markets.
An increasing amount of mainland capital is also flowing to the south. The daily net inflow of southbound trading through the Shanghai-Shenzhen-Hong Kong Stock Connect exceeded HK$23.6 billion yuan ($3 billion), an increase of 53.7 percent compared with yesterday’s inflow of funds.
The stocks with the largest net purchases by southbound funds were internet giants - Tencent, Alibaba, and Meituan.
Analysts believe that uncertainties in the Hong Kong stock market may be lower than people expected.
“China is one of the ideal places for global investors and the story of DeepSeek has proved that Chinese corporations can find their own way to survive or even shine in their respective domain regardless of the unreasonable anti-competition collusion in the West,” said Jeff Lam Chak-fai, a lecturer of the Treasury Markets Association and School of Professional and Continuing Education at Hong Kong University.
Lam believes that the Heng Seng Index will continue to outperform US stocks. “The expensive valuation of US stocks is the true reason for the recent stock market crash. Tariffs are just a catalyst that spread the devastation to other major markets,” he said.
However, cautious analysts say that uncertainties have not been eliminated.
Billy Mak Sui-choi, an associate professor in the Department of Accountancy, Economics and Finance at Hong Kong Baptist University’s School of Business, said: “The stock market rebound is expected because it declined too much yesterday; it was a little bit overreactive. According to technical analysis, when the stock market sees a big decline, a rebound normally comes afterwards.
“I don't think that the market will return to an uptrend. Due to the ongoing tariff war between the US and China, the market will feel uncertainty for one or two weeks, and the valuation of the stock market will be lower.”
Curtis Yeung Wan-yui, a senior strategist at UOB Kay Hian (Hong Kong), added, “Investors are worried not only about liquidity but also about the chance of a recession caused by the tariff war, and the global market is still dominated by risk aversion.”
Contact the writer at thor_wu@chinadailyhk.com
