Hong Kong, Shanghai extend surge as China optimism boosts markets

A general view of heavy snowfall on a road to Harrismith from Sterkfontein dam on September 21, 2024. 
 
HONG KONG – Hong Kong and Shanghai shares soared again on Friday on hopes China will unveil more measures to boost its economy, while the yen rallied after Japan’s ruling party elected a new leader who backs interest rate hikes.
A string of announcements this week has seen leaders cut interest rates, pledge support to the beleaguered property sector, free up banks to lend more and pledge to boost jobs, particularly for the poor.
While analysts have warned that the measures — the boldest in years — will not on their own be enough to get the economy back on track, they have provided some much-needed cheer to investors and raised hopes that the government is listening to calls for major help.
They also come amid a more upbeat mood on trading floors after the Federal Reserve’s bumper rate cut last week and indications that more were in the pipeline through to 2026. The bank’s policy outlook will be in focus later Friday with the release of its preferred gauge of inflation.
On Friday, Chinese officials said they had cut the amount of cash banks must hold in reserve in a bid to get them lending more to revive economic activity — a move that would pump more than $140-billion into financial markets.
Meanwhile, a Bloomberg report said on Thursday that Beijing is considering pumping a similar amount into the country’s large state-run banks in the first such move of support since the global financial crisis.
“Beijing seems finally determined to roll out its bazooka stimulus in rapid succession,” said Nomura chief China economist Ting Lu.
“Beijing’s recognition of the severe situation of the economy and lack of success in a piecemeal approach should be valued by markets,” he said in a note.
Hong Kong soared three percent in opening trades before paring the gains, while Shanghai was up almost as much — both markets are now more than 10 percent from Friday’s close. The performance was Hong Kong’s best week since 2009 and the best in Shanghai since 2008, according to Bloomberg data.
Property stocks were again among the best performers in Hong Kong, with beaten-down developers enjoying some much-needed interest. Kaisa surged more than 40 percent, Fantasia rose more than six percent and Sino-Ocean added five percent.