Hong Kong stocks jump on more China measures to support market, Evergrande liquidation shocker limits rally

Hong Kong stocks jump on more China measures to support market, Evergrande liquidation shocker limits rally

Hong Kong stocks jump on more China measures to support market, Evergrande liquidation shocker limits rally

Stocks in Hong Kong jumped after China’s market regulator suspended securities lending of restricted shares listed on mainland exchanges to stabilise stock prices, adding to a slew of measures to stem a market rout. China Evergrande sank after losing a court case to fend off liquidation.

The Hang Seng Index gained 1.1 per cent to 16,121.89 at 10.55am local time, adding to the 4.2 per cent rebound last week. The Tech Index added 0.8 per cent, while the Shanghai Composite Index declined 0.4 per cent.

Alibaba Group advanced 2.9 per cent to HK$72.95, e-commerce peer JD.com rallied 2.8 per cent to HK$93.95 and Tencent added 0.7 per cent to HK$284.80. Longfor advanced 1.9 per cent to HK$9.62 and China Resources Land jumped 1.7 per cent to HK$24.60 after the city of Guangzhou in southern Guangdong province lifted restrictions on purchases of large homes.

WuXi Biologics rose 2.6 per cent to HK$25.20, recouping some of the 17 per cent plunge on Friday. The firm denied allegations in a proposed US legislation last week that its CEO Chen Zhisheng has ties with the Chinese military. Its sister company WuXi Apptec, also targeted in the bill, tumbled 3 per cent to HK$62.65.

The China Securities Regulatory Commission said it will bar key shareholders from lending their stock under lock-up period from Monday. The decision, announced over the weekend, came after China’s central bank surprisingly cut banks’ reserve ratio to shore up market sentiment.

“The market is still in a rebound phase driven by sentiment recovery,” Kevin Liu, strategist at CICC said in a report on Sunday. “A true trend reversal requires more targeted” policy catalysts, he added.

China bars investors from lending securities during restricted periods

Hong Kong’s stock market recovered last week from a 15-month low to halt a three-week slump. The benchmark index has declined 5.4 per cent so far this month, heading for the worst January since the 6.7 per cent slide in the first month of 2020.

Meanwhile, a court in Hong Kong delivered a judgment against Evergrande in a winding-up case, sending the mainland developer into liquidation. The stock sank 21 per cent to HK$0.163, while its car-manufacturing unit Evergrande New Energy Vehicle slumped 18 per cent to HK$0.229. Evergrande Property Services lost 2.5 per cent to HK$0.39. Trading in all of them has since been halted.

Sentiment is likely to be cautious before more potentially weak economic data this week. Chinese manufacturing is likely to remain in contractionary territory for a fourth month in January, according to economists tracked by Bloomberg. Industrial profits fell 2.3 per cent in 2023, the second straight year of decline, a government report last week showed.

Elsewhere, the Federal Reserve is expected to hold its key rate unchanged at its first policy meeting of the year later this week, according to odds calculated from Fed fund futures contracts compiled by CME Group.

Major key Asian markets traded higher. South Korea’s Kospi advanced by 1.1 per cent and Australia’s S&P/ASX 200 added 0.2 per cent, while Japan’s Nikkei 225 added 0.8 per cent.

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