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DailyBubble News

Hong Kong stocks rise to 8-month highs after China property relief, high dividend-yielding stocks in focus

Hong Kong stocks reached their highest levels in eight months as optimism about China’s economic recovery grew. This optimism was further boosted by the increasing likelihood of a US Federal Reserve interest rate cut following lackluster US jobs data. High dividend yield stocks saw a surge in prices amid talk that Beijing might eliminate a dividend tax on Hong Kong-listed shares for mainland investors.

The Hang Seng Index rose 1.7% to 18,859.60 at the midday trading break, on course for its highest close since August 11. This marked the benchmark’s third consecutive weekly gain, with a 2.1% increase since Monday. However, the Hang Seng Tech Index slipped 0.3% and the Shanghai Composite Index fell 0.2%.

Hong Kong Exchanges and Clearing, the operator of the city’s stock exchange, saw a 6.8% jump to HK$283.60 after its new chief executive Bonnie Chan Yiting reported a surge in listing applications this year. Semiconductor Manufacturing International Corp also rose 2% to HK$16.34 after announcing a 23% revenue growth in the first quarter.

The Chinese cities of Hangzhou and Xian removing restrictions on home purchases, alongside better-than-expected imports and exports last month, fueled optimism for China’s economic recovery. A Politburo meeting chaired by Xi Jinping at the end of April pledged to address the property market crisis.

Analyst Song Yiwei from Bohai Securities in Tianjin noted, “The recovery in China’s fundamentals is ongoing, and corporate earnings are stabilizing. The expectation of a Fed interest rate cut in September is also growing, leading to a re-rating of Chinese stocks.”

The Hang Seng Index has outperformed global markets since April, rising more than 6% this month. China Construction Bank, Industrial and Commercial Bank of China, and China Resources Power all saw significant gains. Speculation about the potential waiver of a 20% dividend tax on stocks mainland investors can purchase via the exchange link program with Hong Kong has further boosted market sentiment.

Asian markets rallied following the release of US jobless claims data, which indicated a cooling job market that could justify a Fed interest rate cut. Japan’s Nikkei 225, South Korea’s Kospi, and Australia’s S&P/ASX 200 all saw gains this morning.

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