Hong Kong stocks rally ahead of anticipated China Golden Week spending splurge

Stocks in Hong Kong surged the most in four weeks, beating Asian peers, on bets spending during China’s Golden Week holiday would provide a much-needed boost to sentiment marred by the country’s property sector crisis. 

The Hang Seng Index and a gauge of Chinese stocks rallied about 3 percent each in Hong Kong trading, with traders citing optimism over Chinese consumption during the peak travel season and dip buying as reasons for the rebound. Mainland markets are closed on a holiday through the end of next week. 

Activity around Chinese shopping malls remained at relatively high levels in September following an increase in August, according to SpaceKnow, a US company that analyzes satellite images. Stocks of shopping mall operators in Hong Kong climbed in anticipation of greater tourist arrivals from mainland for Golden Week celebrations. 

“We are beginning to find a floor from a valuation standpoint and it would not take much good news to start seeing some of these shares move upward,” Derrick Irwin, portfolio manager, Allspring Global Investments told Bloomberg Television. Irwin cautioned that continued weakness in China’s property sector could “further hit the consumers.” 

Rally in Hong Kong also provided a lift to the region’s equity market, with the MSCI Asia Pacific Index climbing 0.4 percent. Friday’s gain helped trim losses for the quarter to less than 4 percent. 

“It looks like a broad relief rally across the region after a week of declines,” said Marvin Chen, a strategist at Bloomberg Intelligence. 

The regional benchmark is still set to decline after three straight quarters of gains, lagging behind peers in the US and Europe. China’s deepening property crisis and the higher-for-longer rates narrative have made emerging market assets less appealing to investors. 

(Bloomberg)