Hong Kong stocks gain as China seen reviewing zero-Covid stance while Fed eases concerns about tightening pace

  • China is said to be reviewing its tough zero-Covid stance in the fight amid pressure on the economy
  • Investors remain wary of tech stocks as top regulator says more is needed to be done to ensure marker order among internet-platform operators

Hong Kong stocks rebounded from a two-year low amid reports China may soften its zero-Covid approach in tackling the pandemic while the Federal Reserve tempered concerns about its policy tightening path.

The Hang Seng Index rose 0.5 per cent to 22,453.50 at the local noon trading break, even as a measure of price swings remained close to a five-month high. The Tech Index declined 1.3 per cent, while the Shanghai Composite Index added 0.1 per cent.

Macau casino operators Sands China and Galaxy Entertainment climbed at least 1.6 per cent, after Dow Jones reported that Beijing was looking into methods to ease its zero-Covid strategy, following earlier expert views on the situation last month. Hotpot restaurant operator Haidilao rallied 4.6 per cent on the back of a management reshuffle.

Sentiment improved after Fed Chair Jerome Powell said that he favoured a 25 basis-point increase in its key rate this month, against some market forecasts for a 50-basis point hike. He also signalled more aggressive measures, unless price pressure wanes after US inflation accelerated at a four-decade high in January.

“This lowered concerns of an aggressive rate hike cycle from the Fed and spilled over to Asian equities today,” said Matthew Simpson, an analyst at StoneX in Sydney. Asian economies are less pressured to tighten, boosting sentiment on stocks in the region, he added.

Inflation concerns heightened over the past two weeks leading to Russia’s invasion of Ukraine, sending oil prices above US$100 per barrel for the first time since September 2014. Futures surpassed US$110 in recent trading.

Hong Kong’s stock market has lost US$215 billion of market value since Russia invaded Ukraine on February 24, making it the worst performer in Asia in the period. The 64 members of the Hang Seng Index trade below their book value on average, according to Bloomberg data.

HSBC and AIA advanced at least 2 per cent. Russian aluminium maker Rusal jumped 15 per cent, halting a three-day, 47 per cent crash amid concerns about potential restrictions on its exports.

The rebound bypassed Chinese tech stocks with Tencent Holdings falling 1.4 per cent and Alibaba Group Holding slipping 0.1 per cent. China’s top banking regulator said more was needed to be done despite progress in its efforts to clamp down bad practices among internet-platform operators.

Markets in Asia-Pacific were stronger with benchmarks in South Korea, Australia and Japan climbing by between 0.6 and 1.4 per cent.

Author: Zhang Shidong, SCMP

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