(Bloomberg) – Hong Kong’s benchmark stock index edged toward a technical bull market, extending the city’s stock market’s stunning rally this month sparked by foreign capital inflows.
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The Hang Seng Index rose nearly 2% on Monday, up more than 20% from its January 22 low. Closing at these levels would meet the definition of a bull market, joining other indexes in China and Hong Kong that have reached such milestones in recent weeks.
Hong Kong stocks rose on the back of strong inflows from mainland Chinese investors, making them one of the world's best performers in April, with some strategists saying currency exposure remains weak amid continued depreciation pressure on the yuan. They say they are aiming to diversify. There are also signs that foreign funds are circulating money out of expensive tech stocks in places like the United States to capture Chinese internet names that are heavily weighted in Hong Kong's stock benchmarks.
“The macroeconomic improvement in the first quarter, solid corporate earnings so far, government support for the stock market, and some improvement in relations with the United States,” said Beisaan Lin, managing director of Union Bancare Privy. “Some bright spots have emerged.” “Volume is high and if it continues to rise, more money will come in for fear of missing out and it could become self-sustaining.”
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Real estate stocks led the broader market rally on Monday as sentiment rose after a major developer agreed to a resolution with bondholders over its liquidity issues. Bloomberg Intelligence's construction company stock index rose 10%, its biggest gain since September. Share prices of Macau casino operators also rose following the introduction of measures to streamline entry and exit procedures for Chinese nationals.
tech gainer
Food delivery giant Meituan and China's biggest internet company Tencent Holdings have been the biggest contributors to the Hang Seng's rise since its January 22 low, according to data compiled by Bloomberg. .
HSI, which rose nearly 9% in April, is one of the best performers among a group of more than 90 global stock indexes tracked by Bloomberg. After an unprecedented four-year losing streak, it is up more than 5% in 2024.
Stocks in China and Hong Kong are buoyed by cheap valuations, some positive news for the world's second-largest economy and its corporate earnings, and measures taken by authorities to restore investor confidence. , is recovering after several years of decline. However, risks remain from geopolitical tensions and doubts about the sustainability of the economic recovery, with investors remaining wary of going all-in on the asset class.
“HSI has successfully broken through a key resistance level at the 250-day moving average, and is likely to reach its next target of $18,300 within the second quarter,” said Dickie Wong, executive director of research at Kingston Securities. We will achieve it.”
–With assistance from John Cheng and Sangmi Cha.
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