Hong Kong stocks move sideways after hitting 8-month highs as mainland China markets reopen

Hong Kong stocks traded sideways after hitting an eight-month high on Monday when mainland China traders returned from a five-day holiday break. The mood was upbeat as a clutch of investment banks made positive calls on the world’s second largest stock market amid expectations of more policy support from Beijing.

The Hang Seng Index was nearly unchanged at 18,466.91 at the noon trading break after trading in a band of less than 0.1 per cent. Early in the session it hit its highest level since September 5. The Tech Index was flat as well while the Shanghai Composite Index advanced 1.1 per cent after a five-day local holiday.

Tencent jumped 0.9 per cent to HK$367.60, gaming firm NetEase added 1.4 per cent to HK$159.30, while EV maker Li Auto surged 6.5 per cent to HK$118.2. Online travel agency Trip.com advanced 3 per cent to HK$414.40 and drug maker Wuxi Biologics rallied 5.4 per cent to HK$14.72.

A Bull Market

Before today’s move, the city’s benchmark index had advanced for nine straight days to register the longest winning streak since 2018 as China’s supportive policy stance and cheap valuations lured global investors. The rally helped register a gain of 20 per cent from the January lows, widely defined as a bull market.

Policies

“A rally in Hong Kong and Chinese stocks could continue in the near term” as a change in global markets narrative looks likely while Beijing rekindles hope for local markets, Nomura analysts including Chetan Seth said in a note on Monday. Still, a follow-through on policies is critical to sustain momentum, they added.

More Positive

Global investment banks Goldman Sachs, UBS and BNP have become more positive on stocks in China and foreign investors loaded up on Chinese stocks for a third straight month in April when China’s State Council, or cabinet, issued a nine-point guideline last month to prop up the US$9 trillion stock market.

The Japanese and Korean markets are out for holidays while Australia’s S&P ASX 200 Index jumped by 0.6 per cent.

About E. J. McKay

E.J.McKay is a Shanghai-headquartered investment bank with a special focus on mergers & acquisitions. We are one of the most long standing independent investment banks in China, with core business of mergers & acquisitions and financing advisory.