SINGAPORE: Hong Kong shares hit their highest in more than two years on Monday, with stocks in tech and tourism surging before steadying as markets awaited the return of China’s investors from a week-long holiday.
The Hang Seng rose more than 2% to 23,241.74 in early trade, its highest since early 2022.
Volumes were well below last week’s 15-year highs and the market drifted to 22,866 amid some anxiety about the resumption of trading on the mainland.
China’s stock, bond and currency markets resume trade on Tuesday and the open is keenly anticipated as a signal of whether a blistering pre-holiday rally is on solid ground.
Markets had gone to last week’s break on an historic tear thanks to the most aggressive stimulus measures since the pandemic.
Authorities cut rates and hinted at fiscal support to shore up an economy that, by Chinese standards, is ailing.
“Mainland investors displayed immense enthusiasm by opening accounts on a large scale during the holiday, which seems unabated,” said Kenny Ng, strategist at China Everbright Securities International in Hong Kong.
He expects a roaring gain of 7-10% on Tuesday, and then a test beyond that.
“The sustainability of the A-share market’s rise starting from Wednesday will have a significant impact on the Hong Kong stock market and overall investor confidence,” he said.
Hong Kong shares snap 6-day winning streak
Signs of persisting euphoria abounded on Monday. Shares in chipmaker SMIC shot more than 20% higher on bets that government backing will be directed at the sector. The stock is up nearly 60% in two sessions.
Travel-exposed Macau casino operators logged large gains, with Sands China and Galaxy Entertainment each up more than 7%.
State-owned conglomerate Citic rose 9% to its highest in a year and a half. China’s blue-chip CSI300 Index soared 25% over five sessions, its strongest gain for such a period on record as frenzied buying strained brokers and trading systems.
On Sept. 30, the index and the Shanghai Composite notched their biggest single-day percentage gains since 2008. China-focused hedge funds are reporting explosive returns.
The rally has taken the Hang Seng from an also-ran to the top-performing major market so far this year, with a 33% gain running ahead of a 21% rise for the S&P 500.
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