Asian stocks were on the march on Friday, enjoying their best day in six weeks, led by a tech rally in Hong Kong sparked by reports China is planning to ease off on their crackdown of the sector and claims that the long-running US-China delisting row could soon be resolved.
Tech firms led a 4% surge in Hong Kong stocks and the territory’s tech index was up 9.96% with titans Alibaba, Meituan and JD.com up more than 15% each, while Tencent put on around 11%.
Chinese shares also jumped after authorities vowed to step up their policy support to stabilise the economy and financial markets hit by domestic Covid outbreaks and rising geopolitical risks.
Its blue-chip CSI300 Index rose 2.4%, to 4,016.24, while the Shanghai Composite Index gained 2.41% to 3,047.06 points.
The Hang Seng Index rose 4.01%, or 813.22 points, to 21,089.39 and the Shenzhen Composite Index on China’s second exchange gained 3.89%, or 70.41 points, to 1,878.88.
However, the CSI300 Index and the Shanghai Composite Index have lost 4.9% and 6.3% for April, respectively, as China’s worst Covid outbreak since Wuhan in 2020 and its zero Covid policy cloud growth outlook.
China’s yuan also rebounded and recovered all intraday losses as market sentiment improved after the policy support announcement.
China will strive to keep economic growth within a reasonable range, achieve social and economic targets for 2022 and preserve the stable operations of capital markets, state media said, citing a meeting of the Politburo, the top decision-making body of the ruling Communist Party.
The meeting, chaired by President Xi Jinping, also said China would roll out measures to support healthy development of the platform economy and property market.
China Sticks to Zero-Covid Plan
“The market reacted positively in line with the policy direction but we do not expect the rise to be sustainable,” said Dan Wang, chief economist at Hang Seng Bank China.
“The Politburo meeting did not propose any new measures that were not previously announced,” Wang said. “Policies outlined suggest that the government and the state sector will play a decisive role in the economy, leaving the market and private sector little room to manoeuvre.”
The Politburo maintained its stance on the controversial zero-Covid policy to control coronavirus outbreaks while minimising the impact on the economy, state media said.
The strict anti-virus policy, which analysts say should be adjusted to help revive economic growth, has placed residents in the financial and commercial hub of Shanghai under a prolonged one-month lockdown, disrupted supply chains and disturbed economic activities across the world’s second largest economy.
China’s capital Beijing closed more businesses and residential compounds on Friday, and the national daily Covid caseload resurged after five consecutive days of decline, with mainland China reporting 15,688 new cases for Thursday, up from 11,367 a day earlier.
Sydney, Seoul, Taipai Advance
Sentiment got a further lift though from China’s stock clearing agency announcing it would halve stock transfer fees from Friday to reduce investors’ trading costs and reinvigorate markets, sending shares of brokers up 4.7%.
Elsewhere across the region, sentiment remained fragile with the ongoing Ukraine conflict, inflation pressures and US interest rate hikes all casting a shadow.
However, Sydney, Seoul, Singapore and Taipei all piled on more than 1%, with Mumbai, Wellington and Jakarta also up. London, Paris and Frankfurt all rose at the start of the day.
Indian stocks edged up with Mumbai’s signature Nifty 50 index up 0.08%, or 12.85 points, at 17,257.90.
Financial markets in Japan were closed on Friday for a public holiday.
Globally, sentiment is weak too with markets expecting 150 basis points of rate hikes in the next three Fed meetings, far outpacing other central banks.
And those bets were not derailed by Thursday data showing the US economy shrank in the first 2022 quarter, though the figures underscored the risks to growth posed by tighter monetary policy.
Hong Kong – Hang Seng Index > UP 4% at 21,089.39 (close)
Shanghai – Composite > UP 2.4% at 3,047.06 (close)
Tokyo – Nikkei 225 > Closed for a holiday
London – FTSE 100 > UP 0.5% at 7,549.93
Brent North Sea crude > UP 0.8% at $108.46 per barrel
West Texas Intermediate > UP 0.5% at $105.92 per barrel
New York – Dow > UP 1.9% at 33,916.39 (Thursday close)
- Reuters with additional editing by Sean O’Meara