Markets may extend rallies with more stimulus on cards

Hong Kong and mainland stock markets may extend their rallies this month with more stimulus expected from China's Two Sessions meetings, and buoyed by continuing strength of the Greater Bay Area's economy, which is now worth 13 trillion yuan (HK$14.3 trillion).

The Chinese People's Political Consultative Conference's annual plenary meeting will kick off today and last until Sunday. The schedule of the National People's Congress meeting will be announced today.

Liu Jieyi, a spokesperson for the CPPCC, said the GBA's economy has made it one of the world's most promising growth areas.

This came as UBS expects the upcoming NPC meeting will set a 5 percent economic growth target again and largely follow the policy stances set in the Central Economic Work conference last December.

Given the expected modest macro policy support and ongoing property downturn, the investment bank said it maintained its baseline forecast of 4.6 percent growth in China's economy this year.

"The A-share market typically performed positively during the two sessions based on data since 2000," China International Capital Corp (3908) analysts said, citing low valuations and policy support. "The market rebound since early February is expected to continue."

Huaan Securities analysts added: "Policy support may be further strengthened if housing prices continue to decline rapidly."

This came after the Shanghai Composite Index increased 8.1 percent last month - the highest in three months.

The Hang Seng Index also rose 6 percent in February with Morgan Stanley predicting a near-end to foreign capital outflows from Chinese stocks.

Elsewhere, US Federal Reserve Chair Jerome Powell is expected to double down on his message that there's no rush to cut interest rates, especially after fresh inflation data showed that price pressures persist.

Powell is headed to Capitol Hill, where he'll deliver his semi-annual monetary policy testimony to a House committee on Wednesday and a Senate panel on Thursday. The US central bank chief and nearly all of his colleagues said in recent weeks they can afford to be patient in deciding when to cut rates given the underlying strength in the US economy.