Further Aid Solicited for Hong Kong Stock Exchange
Hong Kong Stock Market Rally Continues, Fed Rate Cut Likely
The Hong Kong stock market has shown a positive trend, with the Hang Seng Index closing at 24,969.68 points on Tuesday, following a two-session rise of more than 110 points or 0.4 percent. This upward trajectory is largely driven by optimism in the tech sector, with the Hang Seng TECH Index rising 3.52 percent, and Tencent Holdings increasing nearly 5 percent.
However, the performance of some tech giants like Alibaba has been mixed. Alibaba’s Hong Kong-listed shares have seen a slight decrease in recent sessions, even as other internet-related stocks show varied performances within the Hang Seng Tech Index. Alibaba is also planning a spin-off IPO of its self-driving unit Banma, which may affect its stake and share structure.
Mainland Chinese companies listed in Hong Kong have benefitted from ongoing capital inflows via Stock Connect programs, supporting liquidity and investor interest. The positive sentiment reflects easing trade tensions, strong tech earnings reports, and favorable market conditions in both Hong Kong and broader Asian markets.
Despite the optimism, there are some macroeconomic complexities to consider. Hong Kong’s interbank offered rates (HIBOR) have surged recently, impacting liquidity and borrowing costs. Additionally, currency peg dynamics are a factor that investors are monitoring carefully.
Traders believe that the data increases the chances of the Federal Reserve lowering interest rates next month, as indicated by CME Group's FedWatch Tool, which shows a 94.4 percent chance of the Fed cutting rates by a quarter point in September.
Looking ahead, the global markets forecast for Asian markets is positive, largely due to an improved outlook for interest rates. The Hang Seng Index is expected to open higher on Wednesday, following the lead from Wall Street, where all major averages ended near session highs. The S&P 500, for example, climbed 1.13 percent to end at a record 6,445.76.
Meanwhile, crude oil prices slumped on Tuesday ahead of an upcoming meeting between the U.S. and Russian presidents. The Labor Department's consumer price inflation report for July was in line with expectations, and the NASDAQ Composite rallied 1.39 percent to close at a record 21,681.90.
In the wider Hong Kong market, a mix of performances was observed. The financials sector saw gains, while the properties sector experienced weakness, and the technology companies showed a mixed performance. Notable mentions include China Life Insurance, which surged 3.10 percent, China Mengniu Dairy adding 0.80 percent, China Resources Land soaring 2.37 percent, CITIC gaining 0.77 percent, and Xiaomi Corporation spiking 1.77 percent, among others.
The continuous rally of the Hong Kong stock market is largely attributed to the optimism in the tech sector, with the Hang Seng TECH Index rising significantly. The upward trend is driven by strong tech earnings reports, favorable market conditions, and anticipation for a spin-off IPO from Alibaba's self-driving unit Banma.
The tech giants, like Tencent Holdings, are showing positive growth, while some others, such as Alibaba, have exhibited mixed performances recently. The performance of various tech companies in the Hang Seng Tech Index varies, as some internet-related stocks show a positive trend, while others, like Alibaba, experience decreases.
