Hong Kong stocks rise by most in 3 weeks as markets bet on China meeting catalyst, technicals support bounce

President Xi chaired the Politburo meeting last Friday, which will be followed by the Central Economic Work Conference this week
The Hang Seng Index’s technical reading suggests the market sell-off this week towards a 14-month low is nearing an end

Hong Kong stock market

Jiaxing Li

Published: 10:36am, 12 Dec 2023

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Hong Kong stocks rose by the most in three weeks on optimism a key political and economic meeting in Beijing this week could deliver some boost. Technical indicators suggest the market sell-off this month is almost overdone.

The Hang Seng Index closed 1.1 per cent higher at 16,374.50 on Tuesday, halting a three-day slide that took the benchmark to a 14-month low. The Tech Index gained 1.7 per cent while the Shanghai Composite Index added 0.4 per cent.

Sportswear maker Li Ning rose 4.4 per cent to HK$19.10, recouping some of the 14 per cent slump on Monday. Tencent rallied 1.4 per cent to HK$311.40, Baidu climbed 2.1 per cent to HK$110.50 and JD.com added 2.1 per cent to HK$100.30. Alibaba Group climbed 1.9 per cent to HK$70.10, after trimming its stake in logistics provider GogoX, whose stock tumbled 8.3 per cent to HK$0.55.

New World Development gained 1.6 per cent to HK$11.26, after the billionaire Cheng family bought 700,000 shares in the Hong Kong developer on December 11, according to an exchange filing. The stock has fallen 50 per cent this year.

Tuesday’s gain helped to narrow the Hang Seng Index’s decline this month to 3.9 per cent. The index’s 14-day relative strength technical indicator fell to 31, according to Bloomberg data. A 30-point reading typically means a market reversal is imminent.

“Hong Kong stocks are at historical lows after a prolonged correction,” Dai Qing, analyst at Guotai Junan Securities said in a note on Monday. There could be a short-term technical rebound, he added, while potential stimulus from the [Central Economic] Work Conference could be another catalyst, he added.

President Xi Jinping chaired the Politburo meeting on December 8, which will be followed by the Central Economic Work Conference this week. Officials likely have acknowledged delayed and ineffective policy execution after the dovish Politburo meeting in July, Goldman Sachs said.

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Chinese President Xi Jinping visits Shanghai in first post-Covid trip

Elsewhere, US consumer prices probably rose 3.1 per cent in November, versus 3.2 per cent in October, according to economists’ forecasts tracked by Bloomberg. The Federal Reserve is expected to leave its key rate unchanged on Wednesday in the final policy meeting this year.

Wuxi Jinghai Amino Acid jumped 72 per cent to 28.44 yuan on its first day of trading in Beijing.

Most Asian markets gained. Japan’s Nikkei 225 climbed 0.2 per cent, Korea’s Kospi index rose 0.4 per cent and Australia’s S&P/ASX 200 added 0.5 per cent.