Hong Kong’s primary stock index surged significantly on Monday, edging closer to entering a bull market phase as it continued its robust rebound from the lows witnessed earlier this year.
The Hang Seng index climbed by 1.5% to reach 17,916.0 points by 23:47 ET (03:47 GMT), reaching a five-month pinnacle. Surpassing the 20% milestone from the mid-January lows, the index’s current levels signal a potential entry into a bull market.
A bull market is typically recognized when a stock or index closes 20% above its recent low. In the case of the Hang Seng, it had descended to a low not seen in over five years in mid-January.
Monday’s ascent was primarily fueled by advancements in technology and property stocks. The tech sector received a boost from positive earnings reports from U.S. tech giants Microsoft Corporation (NASDAQ: MSFT) and Alphabet Inc (NASDAQ: GOOGL), fostering optimism regarding the future demand for artificial intelligence and its potential impact on tech valuations.
Property stocks rallied following the Chinese government’s decision to relax house buying restrictions in several major cities, aimed at bolstering the struggling property sector.
Further enhancing market sentiment were upbeat earnings announcements. Insurer AIA Group Ltd (HK:1299) surged by as much as 10% after reporting robust first-quarter earnings and announcing a $2 billion increase in its stock buyback plan.
Over the past 10 days, the Hang Seng has maintained an upward trajectory amid mounting optimism regarding China’s economic recovery and expectations of additional stimulus measures from Beijing.
However, local stocks remain susceptible to any adverse indicators regarding Chinese growth or regulatory conflicts with the United States.
While the Hang Seng has recorded a 6.5% increase thus far in 2024, it continues to recover from significant declines experienced over the past three years, primarily stemming from a faltering economic rebound in China. This has presented opportunities for bargain hunting among local stocks.
Despite this, foreign capital inflows have dwindled in recent years due to persistent concerns surrounding China’s economic slowdown. Nevertheless, Hong Kong remains a crucial gateway for ventures into mainland China.