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Hong Kong stocks surge pending corporate performance and policy support

May 13, 2024

Key Points:

  • The Hang Seng Index rose by 0.80%, closing at 19,115.06, while the Hang Seng China Enterprises Index increased by 0.64% to 6,761.64.
  • China’s central bank data indicates a significant drop in aggregate financing, hinting at cautious monetary policy moves ahead.

Hong Kong stocks enjoyed their third consecutive session of gains on Monday, buoyed by investor optimism for forthcoming corporate earnings and potential governmental policy support. This optimism comes in the wake of new data revealing sluggish demand across China.

Hang Seng sees strong upward market movement

The Hang Seng Index increased by 151.38 points to close at 19,115.06, and the Hang Seng China Enterprises Index moved up by 42.78 points, ending at 6,761.64.

SEE: The HK50 sees a rather significant rise on the VT Markets trading app.

Recent central bank data disclosed a reduction in China’s aggregate financing by nearly 200 billion yuan in April from March, marking a first decline of this magnitude since late 2005.

This decrease in credit expansion, though significant, aligns with the intended direction of policymakers who favor maintaining a prudent monetary policy with a slight easing bias.

Inflation trends

New data revealed a 2.5% year-over-year decline in factory-gate prices, marking a 19-month streak of declines. Consumer prices, however, showed a slight uptick of 0.3% in April from a 0.1% increase in March.

The interplay between domestic factors like the pork cycle and external factors such as the Federal Reserve’s policies continues to shape China’s inflation, with projections for consumer price index (CPI) at 0.7% and producer price index (PPI) at -1.5% for 2024.