HSI punches through 20,000 after vow of support

The Hang Seng Index soared 1,672 points, or over 9 percent, to above 20,000 points yesterday after China's State Council vowed to keep stock markets stable amid a rout that erased HK$4.68 trillion in value over the previous two sessions.

Chinese and US regulators have made some "positive progress" on the auditing issue faced by China concepts stocks and were working on cooperation plans, officials said during a State Council meeting.

And Beijing, it was said, would "actively introduce policies that benefit markets," and continue to support various enterprises to seek listings in the overseas markets.

The council also urged enhanced communication and coordination between regulators in the mainland and Hong Kong.

And the China Securities Regulatory Commission confirmed later they would strengthen cooperation with US regulators.

China's central bank and its banking and insurance regulators soon followed suit to pledge support in ensuring market stability and combating short-selling activities.

The key message is "China will proactively release market-friendly news and regulators should coordinate with each other before releasing any market-moving policies," said Hao Hong, chief strategist at Bocom International Holdings.

"We'll still need to monitor what specific policies follow, but at least for now the 'policy bottom' of A shares is secured."

Stocks surged after the announcements with a main board turnover of HK$309.7 billion.

Seven blue-chip stocks rose more than 20 percent and 23 more than 10 percent.

JD.com and Meituan advanced the most at nearly 36 percent and 32 percent, respectively.

The Hang Seng Tech Index rallied 22.2 percent as all constituent stocks jumped.

Equities of Tencent and Alibaba rocketed by 23 percent and 27 percent, erasing losses in the past two days.

Mainland real estate stocks were up too, with Longfor increasing more than 19 percent.

Most financial stocks performed well, and shares of Hong Kong Exchanges & Clearing surged nearly 12 percent. The bounce back came after the selloff in Chinese stocks had worsened on mounting concern that Beijing's close ties with Russia could spark new US sanctions.

Citibank and UBS reportedly asked some clients in the past few days to add capital after the lending value of some of their Chinese tech shares holdings fell.

But Chief Executive Carrie Lam Cheng Yuet-ngor said the recent volatility had not affected Hong Kong's financial stability and market regulation.

Meanwhile, Gain Miles said total Mandatory Provident Fund assets fell to HK$1.13 trillion last month from HK$1.18 trillion at the beginning of the year.

This is due to stock market turbulence caused by the upcoming interest rate hikes and political uncertainty.

And approximately HK$1.3 billion of funds flowed into the bond and money markets last month due to the poor equity market performance.

aiden.he@singtaonewscorp.com