Hong Kong stocks halt 4-day decline as lacklustre GDP data fuels hope of more stimulus

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Investors anticipate increased government spending and bond issuances to achieve the 5 per cent growth target

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Hong Kong stocks reacted sharply to China’s third-quarter economic data, putting the benchmark Hang Seng Index on track for a second weekly decline. Photo: EPA-EFE

Zhang Shidongin Shanghai

Published: 10:37am, 18 Oct 2024Updated: 4:32pm, 18 Oct 2024

Hong Kong stocks snapped a four-day run of losses, as official data showing sluggish economic growth in China bolstered the case for the government to roll out additional measures to reach the annual target. Details from the central bank about the relending programme for stock buy-backs acted as a catalyst.

The Hang Seng Index surged 3.6 per cent to 20,804.11 at the close, paring the loss for the week to 2.1 per cent. Eighty out of the 82 members on the benchmark gained, indicating a broad-based recovery in sentiment. The Hang Seng Tech Index climbed 5.8 per cent.

Benchmarks on the mainland also advanced. The CSI 300 Index rallied 3.6 per cent and the Shanghai Composite Index rose 2.9 per cent.

China’s economy grew by 4.6 per cent in the third quarter, the National Bureau of Statistics said on Friday, decelerating from the 4.7 per cent increase in the previous three-month period. The data was almost in line with the projection of 4.58 per cent growth by economists surveyed by Chinese financial data provider Wind. China’s full-year growth target is set at around 5 per cent.

A separate report showed that home prices declined for a 16th consecutive month in September, suggesting that efforts to bail out the property market have yet to work.

Stocks in Hong Kong and China are struggling to hold onto the gains made since the end of September, when top policymakers signalled a massive stimulus to check a slowdown in growth. Investors are keeping a close watch on the coming gathering of the standing committee of the legislative National People’s Congress, which is expected to approve an increase in government spending and sovereign bond issuances as part of the fiscal package.

“As we head into the final few months of the year, I will keep a close eye on further fiscal stimulus,” said David Chao, a strategist at Invesco. “I expect the Chinese economy to show continued momentum as we head into the final few months of the year, aided by greater fiscal stimulus, improving domestic consumption and a resilient global macro backdrop.”