Hong Kong Equities Hit a one-month High Amid Positive Retail and Industrial Data in China

Hong Kong

China’s strong retail and industrial data helped allay worries about the state of the country’s economy, while Hong Kong stocks surged as dropping US inflation supported predictions that interest rate increases may have peaked. JD.com and Tencent both leaped ahead of their earnings reports.

At the end of Wednesday’s trading, the Hang Seng Index jumped 3.9% to 18,079.00, marking the largest advance since March 1 and pushing the benchmark to a one-month high. The Shanghai Composite Index increased by 0.6%, while the Tech Index surged by 4.4%.

Of the eighty index members, all but one advanced. Alibaba Group surged 5.1% to HK$83.30, Meituan, a food delivery platform, advanced 4.6% to HK$113.30, and Baidu, a search engine provider, increased 5% to HK$109. The e-commerce giant Tencent shot up 4.8% to HK$322.60 and JD.com up 6.4% to HK$105.90 ahead of their quarterly reports, which are expected after the closure of trading.

Lead by local banks and developers, HSBC increased 2.7% to HK$59.90 and Sun Hung Kai Properties strengthened 3.7% to HK$80.75. Bets that the Federal Reserve’s aggressive series of rate increases is coming to an end were supported by a US government data released on Tuesday, which showed inflation slowing more than anticipated.

More encouraging news came on Wednesday when figures from the National Bureau of Statistics showed that China’s industrial output climbed 4.6% and retail sales increased 7.6% last month, both at a quicker rate than in September.

In the meantime, Beijing’s more accommodating policies are evident as China’s central bank used its midterm lending facility to pump 1.45 trillion yuan (US$200 billion) into the banking sector.

Chetan Seth and other Nomura analysts wrote in a note on Wednesday, “We continue to see value in Hong Kong and China stocks, and favour cyclical recovery plays that are beaten down on valuations and possess relatively better fundamentals.”

The Hang Seng Index has increased 5.7% so far this month following a three-month decline, thanks to Wednesday’s gains. However, because of China’s shaky economic recovery, the benchmark index has fallen by almost 10% this year, making it the worst performer among major global indices.

Asian equities increased. Australia’s S&P/ASX 200 gained 1.4%, South Korea’s Kospi leaped 2.2%, and Japan’s Nikkei 225 gained 2.5 percent.

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