Hong Kong Stocks Jump as Fed Signals Rate Cut China Eases Housing Rules

Photo:AFP

Asian stock markets opened the week with strong gains on Monday as investors responded positively to both international economic cues and domestic policy changes in China. The rally in Hong Kong and mainland China was driven by two main factors: a possible interest rate cut in the United States and eased housing policies in Shanghai, signaling a push to revive the domestic property market.

Hong Kong Markets Lead with Strong Gains

In Hong Kong, the Hang Seng Index climbed nearly 2 percent, finishing the day at 25,829.91 points, its largest gain in over two weeks. The Hang Seng Tech Index surged even higher, up 3.1 percent, reflecting strong investor appetite for technology and internet companies.

Leading individual stocks included:

* Zijin Mining (a major mining company) jumped 6.4 percent to HK$24.34, benefiting from rising commodity demand.

* Baidu, China’s search engine leader, rose 6.3 percent to HK$91, boosted by renewed investor confidence in tech stocks.

* NetEase, an online gaming firm, climbed 6 percent to HK$217.60.

* Alibaba Holding Group and JD.com, two of China’s largest e-commerce platforms, rose 5.5 percent and 4.3 percent, respectively, after optimism about economic growth and consumer spending.

However, some sectors saw muted gains or minor declines:

* Geely Automobile Holdings slipped 1.4 percent to HK$19.71.

* BYD Electronic, a handset component manufacturer, dropped 0.8 percent to HK$39.18, showing uneven sentiment across industrial sectors.

Mainland China Markets Also Surge

Mainland Chinese stock markets posted historic gains, signaling optimism around domestic policy and global economic conditions:

* CSI 300 Index, tracking the top 300 companies listed in Shanghai and Shenzhen, rose 2.1 percent, the largest increase since 2022.

* Shanghai Composite Index strengthened 1.5 percent, reaching a 10-year high, supported by positive property policy announcements and strong market liquidity.

Trading volumes also soared, with combined turnover across Shanghai, Shenzhen, and Beijing exchanges surpassing 3 trillion yuan (US$419.3 billion)—the highest since October 2023 and only the second time ever such volumes were recorded. Daily volumes increased by more than 600 billion yuan compared to the previous session, reflecting broad-based investor enthusiasm.

Property Market Stimulus Fuels Investor Optimism

Shanghai’s move to relax housing purchase rules played a significant role in boosting property stocks. Under the new policy, residents can buy unlimited flats outside the city’s outer ring road, an area that constitutes two-thirds of Shanghai’s housing supply. This measure complements similar initiatives by the Beijing municipal government aimed at boosting home sales in a market that has been sluggish for months.

As a result, leading developers saw sharp gains:

* Longfor Group surged 5.2 percent to HK$11.28.

* China Vanke, one of the largest real estate developers, jumped 9.9 percent to HK$5.68.

* China Resources Land advanced 1 percent to HK$31.76, reflecting renewed investor confidence in property equities.

The property sector’s revival is considered critical for China’s broader economic stability, given its significant contribution to employment, construction, and urban development. Analysts suggest that easing purchase restrictions may help restore buyer confidence and stimulate demand in an otherwise slow market.

Global Influence: U.S. Fed Rate Signals Boost Asia

Investor optimism was further supported by global developments. At the Jackson Hole Economic Symposium, Federal Reserve Chair Jerome Powell hinted that interest rates in the U.S. could be cut in the near future due to a softening labor market. This dovish stance immediately influenced global stock markets:

* The S&P 500 rose 1.5 percent, its best day since late May.

* The tech-heavy Nasdaq Composite added 1.9 percent, reflecting optimism for growth-sensitive sectors.

Market analysts are closely watching for a potential September rate cut. The main debate is whether the Fed will implement a moderate 25 basis points reduction or a larger 50 basis points cut. Many investors believe that easier monetary conditions in the U.S. will encourage capital inflows into Asian equities, particularly in China, Korea, and Southeast Asia.

Evergrande Delisting Marks End of an Era

In contrast to the upbeat market sentiment, China Evergrande Group was officially delisted from the Hong Kong Stock Exchange, ending a 16-year listing history. Evergrande, once the largest real estate developer in China by sales, defaulted on its massive debt in 2021. At its peak, the company’s liabilities exceeded US$300 billion.

Trading had been suspended since January 29, 2024, when a Hong Kong court ordered its liquidation after multiple failed attempts to restructure debt. Evergrande’s delisting underscores the ongoing challenges in China’s property sector, highlighting the fragility of developers with high leverage and weak cash flow.

Regional Market Trends

The rally in Asia extended beyond China:

* South Korea’s Kospi gained 1.3 percent.

* Japan’s Nikkei 225 rose 0.4 percent.

* Australia’s S&P/ASX 200 added 0.1 percent.

Analysts attribute these gains to the positive ripple effect of U.S. rate cut expectations and improved investor sentiment in the region, supported by policy measures in China and liquidity inflows.

Analyst Perspectives

Ray Sharma-Ong, head of multi-asset investment solutions for Southeast Asia, said:

“Easier monetary conditions should support a broader equity rebound. If labor market data shows weakness before the Fed’s September meeting, a larger rate cut cannot be ruled out. Asian markets, particularly China and Korea, are likely to benefit from this global liquidity support.”

Analysts believe that the combination of stimulus in property markets, strong corporate earnings, and dovish global monetary signals could sustain market momentum in the near term.

Monday’s trading reflects a turning point in Asian markets, combining domestic policy action with global economic signals. Tech and property stocks led the rally, while other sectors showed cautious gains. Investors will continue to monitor China’s economic policies, property market recovery, and U.S. monetary decisions for further guidance.

Overall, the market surge highlights a mix of optimism, recovery hopes, and ongoing caution as investors navigate global uncertainties and domestic reforms simultaneously.