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Hong Kong stocks lifted by regulator pledge to stem the rout and stepped-up buying by China sovereign wealth fund

In Business
February 06, 2024
Hong Kong stocks rose on Tuesday, halting a two-day decline, after China’s securities regulator pledged a slew of measures to stem the rout and the nation’s sovereign wealth funds boosted buying of onshore shares.

The Hang Seng Index climbed 1.4 per cent to 15,721.63 as of 10.06am local time. The Hang Seng Tech Index gained 2.5 per cent and the Shanghai Composite Index added 0.3 per cent.

Alibaba Group advanced 3.8 per cent to HK$73.25 and Meituan rallied 3.9 per cent to 67.65, while Tencent added 1.7 per cent to HK$284.40. China Merchants Bank gained 2.2 per cent to HK$28.35 and property developer Longfor Group rose 3.5 per cent to HK$8.63.

The China Securities Regulatory Commission (CSRC) said in a statement on its website on Tuesday that it has zero tolerance for market manipulation and vicious short selling and warned of severe fines and criminal sentences. The securities watchdog also cited two cases of manipulations of stocks and futures that it had investigated, as a way to showcase increased market surveillance.

In a separate statement issued by the commission on the same day, Li Chao, CSRC vice-chairman, called for “improving the quality and investment values of listed companies” following visits made by CSRC officials to public companies located in more than 20 provinces.

Central Huijin Investment, a unit of China’s sovereign wealth fund, said in a statement on Tuesday it had increased its purchases of index-based exchange-traded funds (ETFs) recently, and will increase its exposure to this asset class “to maintain the stability of the capital market”.

The Hang Seng Index has dropped 9 per cent this year and it is the worst-performing benchmark globally, as investor confidence has evaporated over the lack of more forceful measures by Beijing to shore up stocks even as the crackdown against corruption in the financial sector intensifies. Data due this week may show that both consumer and produce prices were probably in negative territory in January.

Other major Asian markets all fell. Japan’s Nikkei 225 slipped 0.7 per cent, while South Korea’s Kospi retreated 0.8 per cent and Australia’s S&P/ASX 200 lost 0.7 per cent.

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