Equities across Hong Kong and China surged after China’s state council vowed to keep its stock market stable amid a historic rout that erased $1.5 trillion in value over the past two sessions.
The Hang Seng China Enterprises Index jumped as much as 12% on Wednesday, its biggest gain since the global financial crisis, while a gauge of Chinese tech firms listed in Hong Kong soared by a record 20%. China’s benchmark CSI 300 Index advanced by 4%. Some of the most beaten down stocks like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. gained at least 20%.
The eye-watering rally followed a report by the official Xinhua news agency that China will keep the stock market stable and support overseas share listing, citing a meeting chaired by Vice Premier Liu He. The report follows a series of articles by state media in recent days seeking to talk up sentiment.
Hong Kong's China stock gauge jumps most since 2008 after remarks© Bloomberg Hong Kong's China stock gauge jumps most since 2008 after remarks
Equities in the region have seen intense selling recently amid regulatory fears and speculation that Beijing’s ties with Russia may bring additional U.S. sanctions. Investors had been weighing cheap valuations against lingering risks for tech firms including a possible U.S. delisting of Chinese stocks. A lockdown in tech hub Shenzhen was also weighing on sentiment.
“Usually the market’s natural bottom comes after the policy bottom, which we are seeing now,” said Li Weiqing, fund manager at JH Investment Management Co. “This time around things may be different, as the rout was looking like a financial crisis; the macro figures are also pointing to a bottom. But even if this is not the end, we can at least expect more stability in the next week or so.”
Even with the latest bounce, some market watchers say it’s too early to call an end to the rout. JPMorgan Chase & Co. earlier this week labeled some Chinese internet names as “uninvestable” in the short term.
Meanwhile, short sell turnover in Hong Kong shares accounted for more than 20% of total equity trading on Monday, the highest since late January, according to data compiled by Bloomberg.
“Personally I fear that the crisis the market faces is not just about China, it’s a global issue, and not just something that regulators can solve with this,” said Wang Mingxuan, fund manager at Quant Technology Investment. “The calm this bring is just the calm before the storm.”
Leave a Reply