Hong Kong stocks rise to 8-month highs after China property relief, high dividend-yielding stocks in focus

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Optimism is accelerating that China’s economic recovery will speed up after two key cities of Hangzhou and Xian unveiled plans to scrap all limits on home purchases

Hong Kong Exchanges and Clearing, the operator of the city’s bourse, jumped after its new chief executive Bonnie Chan Yiting said that listing applications have surged

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General view of Hong Kong Exchange Square in Central. Photo: Jelly Tse.

Zhang Shidongin Shanghai

Published: 10:50am, 10 May 2024Updated: 4:45pm, 10 May 2024

Hong Kong stocks advanced to eight-month highs fuelled by optimism that China’s economic recovery is on track, with additional boost provided by growing odds of an interest-rate cut by the US Federal Reserve after tepid US jobs data. High dividend yield stocks surged on talk that Beijing may scrap a dividend tax on Hong Kong-listed shares available for mainland investors.

The Hang Seng Index finished the day 2.3 per cent higher at 18,963.68, its highest close since August 11. The 82-member benchmark has climbed 2.6 per cent since last Friday, its third straight weekly gain. The Hang Seng Tech Index added 0.4 per cent and the Shanghai Composite Index ended flat.

Hong Kong Exchanges and Clearing, the operator of the city’s bourse, jumped 7.6 per cent to HK$285.80 after its new chief executive Bonnie Chan Yiting said that listing applications surged this year. Semiconductor Manufacturing International Corp added 1.5 per cent to HK$16.26 after reporting 23 per cent revenue growth in the first quarter.

Optimism is growing that China’s recovery will gather further pace after two key cities of Hangzhou and Xian scrapped all restrictions on home purchases, and both imports and exports beat projections last month. A Politburo meeting chaired by Communist Party boss Xi Jinping at the end of April vowed to tackle the crisis on the property market.

View of the city of Xian (Sian, Xi’an), Shaanxi province, China. Photo: Shutterstock

“The recovery in China’s fundamentals is continuing and corporate earnings are bottoming out,” said Song Yiwei, an analyst at Bohai Securities in Tianjin. “Meanwhile, expectations that the Fed will cut interest rates in September have been growing. All these factors are driving re-rating of Chinese stocks.”

The Hang Seng Index has extended its world-beating run since April, and has risen 6.8 per cent this month, as mainland China’s securities regulator pledged support by expanding the exchange link programme with the city and lifting the quality of listings.