(Bloomberg) — Hong Kong’s benchmark stock index is heading into a technically bullish market as rising Chinese property stocks provided more impetus for this month’s dramatic rebound.
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The Hang Seng Index jumped more than 2% on Monday, rising from a Jan. 22 low to more than 20%. A close at these levels will see the indicator meet the definition of a bull market, joining a cohort of other indices in China and Hong Kong that have reached such a milestone in recent weeks.
Monday’s trading witnessed a broadening rally that helped Hong Kong stocks rank among the world’s best performers in April, with Goldman Sachs Group Inc. saying a “fear of missing out” could accumulate. These gains are due to strong capital inflows from the mainland as well as a rotation of global funds into relatively cheap Chinese internet stocks, which have a high weighting in the Hang Seng index.
“The recent rally and outperformance was likely driven by some reallocation flows as global risk sentiment took a hit and China, with its steep discount, found some support from investors,” the strategists of Nomura Holdings Inc., including Chetan Seth, wrote in a note. “We therefore believe that China could continue to outperform, particularly in a scenario where global risk sentiment remains cautious.”
Real estate stocks led gains in the broader market on Monday, as sentiment rose after a major developer reached a resolution with bondholders for its liquidity problems. A Bloomberg Intelligence gauge of builder stocks jumped more than 12%, the highest since November 2022. Shares of Macau casino operators also jumped after the introduction of measures to streamline the entry and exit process. exit for Chinese citizens.
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“People are excited about a potential change in political mindset towards the real estate sector,” as policymakers will focus on boosting demand with the government buying up unfinished projects, said Zhang Hao, chief investment officer at Granford (Beijing) Capital Management. Co. “The rally in Hong Kong today is really driven by these hopes and it could have more momentum given that valuations have been depressed for so long.”
China is expected to hold a Politburo meeting this week to discuss the current state of the economy and assign key tasks and policies for the rest of this year. Investors will be watching the event for any changes to the language on policy support to boost growth.
Bull market
Last week, it was the heavyweight technology sector that stood out, with the Hang Seng Tech Index climbing more than 13%. The gauge increased its lead on Monday and in the process erased all its losses for 2024.
Food delivery giant Meituan and Tencent Holdings Ltd. — China’s largest internet company, are the biggest contributors to the benchmark Hang Seng Index’s advance since its Jan. 22 low, according to data compiled by Bloomberg.
The HSI and the…
