The Hang Seng Index closed 5.05% higher than the day prior, ending a weeklong sell-off with a surprising rebound. News of China’s plan for several trillion RMB worth of fiscal stimulus helped drive the rally, as investors anticipate these policy measures will ease China’s economy.
Reuters’ recent report of no new domestic COVID-19 cases in China suggests the country may be in the recovery phase of the outbreak. Although there are concerns that the coronavirus will lower global consumer demand, corporate earnings and analyst forecasts have helped partially price these worries into market expectations.
China Mobile share price was the index’s biggest gainer and traded up 13.6% on earnings results; they reported lower capital expenditures than expected. Hong Kong and China Gas traded 8.5% lower as they reported dividends that missed the company’s guidance.
Macau gaming-related companies gained positive sentiment from investors with news of casino operations back to 80% resumption. Galaxy Entertainment Group L’s share price traded up 11.9%. Cement and real estate company share prices performed better due to market optimism for government support. China Resource Cement’s share price increased 8.3%, and Anhui Conch Cement’s share price traded up 9.7%.
Regional markets traded higher as sentiment turned positive for emerging markets in Asia. The Korea KOSPI index traded 7.4% higher. The Taiwan Stock Exchange Weighted index traded 6.4% higher.
Year-to-date, Hong Kong has corrected 22.3%, factoring in today’s performance. Looking forward, investors may remain more cautious as there are no near-term solutions for the virus outbreak and fears of fund redemptions increase.
(Assignment piece during Master’s Program)