China’s state council vowed to keep its stock market stable after a historic rout erased $1.5 trillion in value over the past two sessions. Equities in both Hong Kong and China surged after the comments from Chinese state authorities.
The Hang Seng China Enterprises Index jumped as much as 12%, underscoring its biggest gains since the global financial crisis while gauge of Chinese tech firms in HSI went up by record 20%.
CSI300 advanced b6 4% while beaten down stocks Alibaba Group Holdings and Tencent gained at least 20%.
Official new agency of China reported that authors will keep the stock market stable and support overseas share listing, citing a meeting chaired by Vice Premier Liu He. The meeting signaled to welcome long term institutional investors. The authorities vowed to adopt effective policies to handle developers’ risks come up with effective risk-prevention moves for the real estate sector.
Over regulatory fears both at home and in the U.S. along with Chinese ties with Russia on the war, collectively raised worries of investors leading to a relentless selloff of Chinese equities in the past few session. A lockdown in tech hub Shenzhen was also weighing on sentiment.
“Usually the market’s natural bottom comes after the policy bottom, which we are seeing now,” said Li Weiqing, fund manager at JH Investment Management Co, as reported by Bloomberg.
“This time around things may be different, as the rout was looking like a financial crisis; the macro figures are also pointing to a bottom. But even if this is not the end, we can at least expect more stability in the next week or so.”
JPMorgan Chase & Co. earlier this week labeled some Chinese internet names as “uninvestable” in the short term.
Meanwhile, short sell turnover in Hong Kong shares accounted for more than 20% of total equity trading on Monday, the highest since late January, according to data compiled by Bloomberg.
“Personally I fear that the crisis the market faces is not just about China, it’s a global issue, and not just something that regulators can solve with this,” said Wang Mingxuan, fund manager at Quant Technology Investment.
“The calm this bring is just the calm before the storm.”
