Shoppers walk through a street market in Hong Kong, China, on Sunday, January 30, 2022. Photographer: Chan Long Hei/Bloomberg via Getty Images
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Hong Kong stocks kicked off 2023 with the highest gains they’ve seen in the first trading session of a year since 2018.
The Hang Seng Index on Tuesday rose 1.84%, or 363.88 points – its biggest first-day gain since January 2018, when the index was up nearly 2%.
That signals an improved outlook as China continues to reopen despite a nationwide increase in Covid-19 cases.
“While it is inevitable to see further strong spikes and broader trends in the early stages of opening up, the outlook for the Chinese economy is brighter in 2023, “Redmond Wong, Saxo capital market Greater China market strategist, said in a note.
“In addition to reopening, China has stepped up efforts to support the struggling real estate sector and give property developers access to credits and equity financing. which was rejected for most of 2022,” Wong wrote.
Real estate and technology stocks continued to support the Hang Seng Index, which was up more than 3% in Wednesday’s trading session. The index exceeded 20,600, the highest level since July 29, according to Refinitiv data.
Shares of Chinese property developers listed in the city rose: country garden increased by more than 7%, longfor group nearly 12% and Cifi Holdings rose 13% on Wednesday.
Next moves report Chinese officials plan to provide further policy support to ailing property developers.
Technology shares also rallied, with shares of alibaba 8% increase later Chinese regulator approved Ant Groupplans to more than double registered capital, a sign of progress in addressing regulatory concerns.
electric vehicle manufacturer Baidu increased by more than 8%; Chinese video and game apps Bilibili nearly 9% increase; Netease increased by more than 5%; JD.com increased by 7%; and Tencent also increased by about 4%.
The Hang Seng protest came after Chinese Finance Minister Liu Kun said Xinhua News Agency in an interview that there will be more fiscal policy support.
Shoppers buy festive sweets ahead of the Lunar New Year at a street stall in Hong Kong, China, on Sunday, January 30, 2022. Photographer: Chan Long Hei/Bloomberg via Getty Images
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The minister said the government will work to expand and improve “the effectiveness of proactive fiscal policy to deal with the many challenges ahead”.
Chinese investment bank Guotai Junan Securities said the performance of Hong Kong stocks will affect the broader global market.
“The Hang Seng Index could lead other major global stock indexes by 2023, with an expected return of around 30%,” analysts at the company said in a report today. Wednesday.
“Index valuations are subject to further correction and we expect HSI to recover to previous levels by June 2022,” they said in the note.
Implications for the US Fed
Analysts at Raymond James said China’s reopening is a positive sign for Asian stocks and global economic growth in 2023, but it also carries potential inflation risks due to its role. China’s role in driving demand for the global commodity market.
“Weaker growth in the Chinese economy will likely increase the chances of a more dovish Federal Reserve, while stronger growth will increase the likelihood of one,” wrote strategist Tavis McCourt. Stubborn Fed.”
“Volatility looks solid with stocks ending up a little higher or a little lower depending on the yield path,” McCourt said in the note.
