Editorial | Hong Kong and Chinese mainland markets have to keep confident run going
Higher hopes for sustained rally by Hong Kong and mainland bourses thanks to surprise moves that have reinvigorated investors
Hong Kong and mainland markets have roared back from the doldrums, thanks to a flurry of surprises last month including a larger than expected Fed rate cut, a blockbuster IPO, and a stimulus bazooka for the markets from Beijing. It is unclear whether the rally can be sustained.
Predicting a bourse’s direction is always risky, but there are signs it may not just be a flash in the pan. That would be good news for investors, who have had little to cheer about.
An initial boost came when the US Federal Reserve Board pared interest rates by a generous 50 basis points in mid-September, helping capital flow back to the region. Another cut is expected this year.
A post-Covid rebound never materialised and China’s economy has been sluggish. Policy priority has focused on shifting to quality growth from technology and financial services, and away from slumping property and traditional manufacturing.
But a surprise Politburo meeting chaired by President Xi Jinping last week signalled an all-out effort to revive growth, pledging to ramp up fiscal policies and suggesting stimulus to revive the property sector.
The central bank, the People’s Bank of China, had just lowered mortgage rates and cut the reserve ratio requirement to free up funds, and pledged support measures for real estate and stock markets.
