Hong Kong Stocks Rebound, Bolstered by Chinese Support

Hong Kong’s stock market strengthened on Monday (November 2) following reports that Chinese regulators are preparing new measures to shore up the capital markets. The Hang Seng Index rose 0.4%, while the index tracking Hong Kong-listed technology stocks surged 2.3%, marking a partial recovery after coming under pressure in previous sessions.

This rally follows reports that China’s central bank and securities regulators are set to meet with brokerage firms and investment managers to discuss steps to support the capital markets. It is also reported that China will launch a third round of a swap facility, enabling securities firms, investment funds, and insurance companies to access liquidity for the purpose of purchasing stocks.

Positive sentiment was also evident in mainland Chinese markets. The CSI 300 Index climbed 0.8%, following an 8.5% decline throughout October—its worst monthly performance in over a decade. Meanwhile, the Shanghai Composite Index jumped 1.1%, marking its largest daily gain since August 27.

The market gains were further supported by a surge in trading volume for several exchange-traded funds (ETFs) frequently used by state-backed investors. This has fueled speculation that Chinese authorities are intensifying their support for the market, as previous stimulus measures were deemed insufficient to sustain positive sentiment.

However, pressure in the bond market remains a concern. Worries surrounding the Zhuhai Huafa Group continue to weigh on various credit instruments, following reports that the conglomerate is facing difficulties in making payments on trust products and is seeking extensions on several bank loans. This strain has even begun to spill over into certain bond funds.

Separately, the market is also monitoring the yuan, which reached its strongest level against the U.S. dollar in more than four years. China’s central bank has also injected liquidity into the banking system by shifting its primary policy rate to an overnight lending rate—a move expected to help ease funding conditions.

The movement of Hong Kong stocks will now largely depend on the extent to which support from the Chinese government can restore investor confidence. Beyond domestic policies, the market is also bracing for the U.S. midterm elections, which could potentially influence global sentiment and the direction of capital flows into Asian assets. (arl)

Source: Newsmaker.id