Hong Kong stocks surged to their highest level in two weeks, driven by positive industrial profit reports and expectations of supportive measures from the upcoming Politburo meeting. The Hang Seng Index rose 1.8% to 17,331.24 at midday, marking its largest gain since July 12. The Hang Seng Tech Index climbed 0.7%, while the Shanghai Composite Index remained relatively stable.
Hong Kong
Alibaba saw a significant boost, with its shares jumping 5.3% to HK$76.95. JD.com also performed well, rising 2.3% to HK$104.70, and Tencent gained 1.7% to HK$360.60. In the financial sector, insurer AIA increased by 2.2% to HK$52.85, and HSBC was up 1.3% at HK$67.10.
Before today’s rally, the benchmark Hang Seng Index had fallen by 3.9% in July, marking its steepest monthly decline since January. This drop was attributed to a lackluster policy response from the Third Plenary Session and weak economic fundamentals, which led investors to sell off local stocks. This decline had pushed the Hang Seng Index’s 14-day relative strength index close to 30, indicating an oversold market, according to technical analysts.
“The market has reached key support levels following a significant correction,” noted Kevin Liu, equity strategist and managing director at CICC, in a report on Sunday. “Unless unexpected shocks occur, there’s a chance the market could stabilize from this point.”
Hong Kong Industrial profits rose 3.5% year-on-year in the first half of the year, a slight acceleration from the 3.4% increase observed from January to May, according to the National Bureau of Statistics (NBS) report released on Saturday. This improvement has bolstered investor optimism as they await further policy support from the Politburo meeting later this week. Recent policy moves, including rate cuts and the issuance of 300 billion yuan (US$41.3 billion) in ultra-long-term treasury bonds, have already provided some support.
Hong Kong Analysts are expecting the Politburo meeting to have a more substantial impact on market expectations than the recent Third Plenary Session, which focused on long-term goals but emphasized Beijing’s commitment to achieving its near-term GDP growth target of “around 5%.” Goldman Sachs analysts anticipate that policymakers will continue to address growth challenges, maintain an easing stance, and introduce additional support measures, particularly in fiscal and housing policies.
Hong Kong In addition, global market attention is turning to the US Federal Reserve, which is expected to offer further clues about its plans for cutting benchmark interest rates in September following its meeting on Wednesday.
Other major Asian markets also advanced in anticipation of central bank decisions. Japan’s Nikkei 225 surged 2.3%, South Korea’s Kospi rose 1.3%, and Australia’s S&P/ASX 200 gained 0.8%.
