JD.com, Alibaba propel stocks in Hong Kong as China’s backing for markets spurs confidence while Fed begins rate lift-off

  • Recovery momentum builds as investors snap up stocks trading at multi-decade low in valuations after this month’s rout
  • The Federal Reserve raised its target rate for the first time since 2018 to contain inflation, while signalling hikes in each of the next six policy meetings this year

Hong Kong stocks advanced as investors regained confidence after China vowed to support the market with coordinated measures. The Federal Reserve raised its benchmark interest rate for the first time since 2018 to contain inflation, underscoring optimism in the economic outlook.

The Hang Seng Index climbed 5.8 per cent to 21,250.97 at the local noon trading break, adding to the biggest rebound since October 2008 a day earlier. The Tech Index surged 7.3 per cent, following a record 22 per cent jump on Wednesday, while the Shanghai Composite Index gained 2.6 per cent.

JD.com and Alibaba Group Holding led gainers, surging by at least 10 per cent to HK$243.80 and HK$99.90 respectively. Meituan soared 11.7 per cent to HK$156.40 while Tencent gained 5.7 per cent to HK$387.80. Developer Country Garden jumped more than 22 per cent to HK$5.29.

Today’s advance added to a massive rebound after a State Council committee vowed to ensure market stability after valuations slumped to multi-decade lows. Investors dumped stocks over the past month amid a resurgence in Omicron cases, while the Ukraine invasion and delisting pressures on US-listed Chinese stocks sapped global risk appetite.

In a veiled reference to the trillion-dollar tech crackdown, the committee chaired by vice premier Liu He also said “any policy that has a significant impact on the capital market should be co-ordinated with the financial authorities in advance to maintain stable and consistent expectations,” Xinhua News Agency reported.

US policymakers boosted the federal funds rate by 25 basis points to a range of 0.25 per cent to 0.5 per cent on Wednesday as expected, while also signalling six more increases this year in the lift-off, after consumer prices rose by the most in four decades.

“They sound more cautious and dovish than expected, proving they would act carefully to minimise the impact of the rate hike,” said Will Shum, portfolio management director in Hong Kong at iFast Financial. “So, no more shock is good news to market sentiment.”

The Hong Kong Monetary Authority raised its base rate to 0.75 per cent in lockstep under its pegged exchange rate system. While the local one-month interbank rate adjusted to 15-month high of 0.27 per cent, commercial banks are not expected to tweak their lending rates to shield borrowers.

The HKMA sets the base rate at 50 basis points above the lower end of the Fed target rate, or the average of the five-day moving averages of the local overnight and one-month interbank offered rates, whichever is the higher.

Elsewhere, the city’s finance chief Paul Chan Mo-po said the government is hoping to reopen the border with mainland China as soon as practicable this year. He also said Hong Kong will benefit from potential home-coming of Chinese companies as they delist from US exchanges.

Metals producer Ganzhou Teng Yuan Cobalt New Material Company jumped 13 per cent on its first day of trading in Shenzhen. Another debutant Beijing Deep Glint Technology, an artificial intelligence software development firm, slipped 4 per cent.

Markets in Asia Pacific rose. Japanese shares gained 3.1 per cent, while Australian and South Korean stocks appreciated at least 1 per cent.

Author: Cheryl Heng, SCMP

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