Hong Kong stocks surged as China’s market regulator suspended securities lending of restricted shares listed on mainland exchanges to stabilize stock prices. This is part of a series of measures being taken to stop a market rout. However, the surge was curbed due to China Evergrande’s stock falling after losing a court case against liquidation. The Hang Seng Index gained 0.8 percent to 16,077.24 on Monday, rebounding from a 15-month low the previous week. The Tech Index rose 0.5 percent, while the Shanghai Composite Index weakened 0.9 percent. Alibaba Group, JD.com, and Baidu all saw gains, as did China Unicom, Sinopec, and PetroChina. Meanwhile, Longfor and China Resources Land also added value after the city of Guangzhou lifted restrictions on purchases of large homes.”The market is still in a rebound phase driven by sentiment recovery,” said Kevin Liu, a strategist at CICC, in a report on Sunday, adding that “A true trend reversal requires more targeted policy catalysts.”
A court judgment against Evergrande Group contributed to a decline in Hong Kong’s stock benchmark index this month. China Evergrande sank 21 percent after a Hong Kong court ordered the developer to fold up due to its failure to present a satisfactory plan to repay creditors. Its unit Evergrande New Energy Vehicle and property management firm Evergrande Property Services both experienced significant losses as well. Trading in all of them was halted soon after the judgment.
WuXi Biologics experienced a drop after denying allegations in a proposed US legislation that its CEO has ties with the Chinese military, while its sister company WuXi Apptec, also mentioned in the bill, also saw a significant decline.
Sentiment is likely to be cautious before potentially weak economic data this week, including Chinese manufacturing data that is expected to remain in contractionary territory. Industrial profits also fell 2.3 percent in 2023, according to a report last week.
The Federal Reserve is expected to keep its key rate unchanged at its first policy meeting of the year. Other major Asian markets also traded higher, including South Korea’s Kospi, Australia’s S&P/ASX 200, and Japan’s Nikkei 225.
