SINGAPORE: Hong Kong shares hit their highest in over two-and-a-half years on Monday, with tech and tourism stocks surging ahead of China's return from a week-long holiday.
The Hang Seng touched its highest since February 2022 and closed 1.6% higher at 23.099.78. Volumes were high but well below 15-year peaks hit last week.
China's stock, bond and currency markets resume trade on Tuesday and the open is keenly anticipated as a sign of whether the blistering pre-holiday rally is on solid ground.
Chinese markets had closed last week on a historic tear, thanks to the most aggressive stimulus measures since the pandemic. Authorities cut rates and hinted at fiscal support to shore up an economy that, by Chinese standards, is ailing.
"Mainland investors displayed immense enthusiasm by opening accounts on a large scale during the holiday, which seems unabated," said Kenny Ng, strategist at China Everbright Securities International in Hong Kong. He expects a roaring gain of 7%-10% on Tuesday, and then a test beyond that.
"The sustainability of the A-share market's rise starting from Wednesday will have a significant impact on the Hong Kong stock market and overall investor confidence."
Signs of persisting euphoria abounded on Monday.
Chipmaker SMIC's shares shot up more than 21% on bets that government backing will be directed at the sector. The stock is up 60% in two sessions.
Travel-exposed Macau casino operators logged large gains, with Sands China and Galaxy Entertainment each up over 9%.
State-owned conglomerate Citic advanced nearly 13% and hit its highest in more than five years and insurer China Life jumped 12.4%.
About 5.1 billion Hang Seng index shares were traded, roughly 137% of the market's 30-day moving average.
China's blue-chip CSI300 Index has soared 25% over five sessions, its strongest gain for such a period on record, as frenzied buying strained brokers and trading systems.
On Sept. 30, the index and the Shanghai Composite notched their biggest single-day percentage gain since 2008. China-focused hedge funds are reporting explosive returns.
The rally has taken the Hang Seng from an also-ran to the top-performing major market this year, with a 33% gain running ahead of a 21% rise for the S&P 500. - Reuters
