Hong Kong stocks gain as China pledges to front-load policy support, hints at easing regulations on companies

  • Meituan, Tencent and Alibaba pace winners as China’s Central Economic Work Conference concluded with pledges to stabilise growth, front-load policy support
  • Excessive capital growth may instead be curbed with a type of “traffic-light” mechanism

Hong Kong stocks advanced after China pledged to front-load policy support to stabilise growth next year and hinted at easing regulations on private companies.

The Hang Seng Index climbed 1 per cent to 24,238.13 as at noon local time on Monday, adding to a 1 per cent gain last week. The Tech index rose 1.3 per cent, while the Shanghai Composite Index gained 1 per cent.

Meituan led early winners with a 4.4 per cent rally, while Tencent Holdings appreciated 2.6 per cent. Alibaba Group Holding, the owner of this newspaper, jumped 3.1 per cent and its health information unit surged 5.2 per cent.

China’s top policymakers concluded its Central Economic Work Conference on Friday by pledging to ensure economic stability next year and to “front-load” policy support. They aimed to keep the economy within a reasonable range while maintaining social stability, the state-run Xinhua News Agency reported, citing an official statement.

Beijing also hinted it would go easier on regulation of big private sector players after a heavy-handed crackdown this year jolted domestic markets and knocked trillion dollars of market value. Excessive capital growth may instead be curbed with a type of “traffic-light” mechanism, it added.

Foreign traders have loaded up more onshore stocks over the past nine days, topping up their net purchases by almost 31 billion yuan (US$4.8 billion) through the Stock Connect link. A government report last week showed producer price index cooled last month from a 26-year high.

“Sentiment is gradually turning towards Chinese stocks, with foreign flows being positive, said Thomas Poullaouec, head of Asia-Pacific multi-asset solutions at T. Rowe Price, said in a note to clients. “Inflationary pressures are far more subdued than in the Western world; this gives room for the policymakers to ease from here.”

At least 40 of 64 Hang Seng Index members gained in Monday trading. Policy easing bets helped lift the Hang Seng Index from a 14-month low last week, adding back US$260 billion of market value, according to Bloomberg data.

Elsewhere, Yonghe Medical Group, which provides hair-related health care services, climbed 6.7 per cent to HK$16.86 on the first day of trading in Hong Kong.

Major Asian markets jumped on Monday as investors keep their eye on a handful of central bank policy meetings this week. Stocks in Japan advanced 0.8 per cent, while those in South Korea and Australia climbed by 0.3 per cent and 0.6 per cent respectively.

Author: Cheryl Heng, SCMP

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