HONG KONG: Chinese stocks rebounded on Wednesday and Hong Kong shares surged as traders cheered cooling US inflation data, which is likely to bring an end to the Federal Reserve’s rate hikes.
Investor sentiment was also boosted by positive news at home, including a potential $137 billion funding for the property market, improved October retail sales, and President Xi Jinping’s visit to the US China’s blue-chip CSI 300 Index rose 0.7%, while the Shanghai Composite Index advanced 0.6%.
Hong Kong’s Hang Seng Index jumped 3.9%, marking its best day in nearly four months. Tech firms rallied 4.4% to lead the gains.
Broader Asia-Pacific shares outside Japan also picked up, with slowing October inflation supporting the idea that the Federal Reserve was done raising interest rates.
China plans to provide at least 1 trillion yuan ($137.22 billion) of low-cost financing to the nation’s urban village renovation and affordable housing programs, Bloomberg News reported, citing people familiar with the matter.
Hong Kong-listed Chinese property stocks soared over 5% following the news.
The reported fund injection will add to the long list of piecemeal measures announced by China to support its economy and financial markets, said Chetan Seth, Asia-Pacific equity strategist at Nomura in a note.
“We continue to see value in HK/China stocks and favour cyclical recovery plays that are beaten down on valuations, and possess relatively better fundamentals,” he said.
Economic activities also showed signs of improvement, with October industrial output rising at a faster pace and retail sales growth beating expectations, according to official data.
Retail sales rose 7.6% last month, quickening from a 5.5% gain in September and hitting the fastest growth since May.
The data shows that two out of three growth propellers have largely stabilized, said David Chao, global market strategist for Asia Pacific (ex-Japan) at Invesco.
Meanwhile, China’s central bank ramped up liquidity injection by pumping a net 600 billion yuan into the banking system on Wednesday.
The yuan traded near its firmest level against the dollar in more than two-months on Wednesday on the back of better onshore and offshore investor sentiment.