Hong Kong stocks stage largest rally in 5 weeks; hopes rise for new stimulus from Beijing

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Industrial profits at large Chinese companies dropped 10 per cent from a year earlier in October

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Zhang Shidongin Shanghai

Published: 10:24am, 27 Nov 2024Updated: 4:45pm, 27 Nov 2024

Hong Kong stocks staged their biggest rally in five weeks as a report on Chinese industrial profits soothed some worries about the strength of the country’s economic recovery, while investors bet on more stimulus policies from Beijing ahead of a key economic meeting.

The Hang Seng Index jumped 2.3 per cent to 19,603.13 at the close, rebounding from a two-month low, while the Hang Seng Tech Index advanced 3.6 per cent. On the mainland, the CSI 300 Index climbed 1.7 per cent and the Shanghai Composite Index added 1.5 per cent.

Chow Tai Fook Jewellery Group jumped after unveiling a share repurchase plan of up to HK$2 billion (US$257 million). Meituan surged ahead of its Friday earnings release; its profit likely more than doubled.

Industrial profits at large Chinese companies dropped 10 per cent from a year earlier in October, compared with a 27 per cent decline for the previous month, the National Bureau of Statistics said on Wednesday. Profits fell 4.3 per cent in the first 10 months of the year, it said.

The report adds to evidence that the uneven recovery in China’s economy is persisting. Key October economic data showed a pickup in retail sales, though deflationary pressure persisted and the property market remains troubled. Investors are looking to the annual economic work conference next month for clues on key economic policies for next year.

“We are relatively cautious about Hong Kong stocks in the near term,” said Zhang Sida, an analyst at Guoyuan Securities in Shenzhen. “Sentiment is weak because of China’s lower-than-expected fiscal stimulus and the tariff risk. We could see more volatility ahead. China’s fiscal policy and the strength of the economy are still the decisive factors in determining the market’s direction.”