Hong Kong stocks surge on China’s US$140 billion liquidity injection plan, Alibaba jumps 7% on insider buying

China’s central bank to cut reserve ratio by 50 basis points on February 5, unleashing 1 trillion yuan (US$140 billion) of liquidity to spur lending

Alibaba Group jumped by the most since November amid reports key corporate insiders have added to their holdings during the recent market slump

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Stocks in Hong Kong post another major bounce after China’s central bank unveiled a liquidity injection plan from February 5, 2024. Photo: Xiaomei Chen

Published: 10:40am, 24 Jan 2024Updated: 5:20pm, 24 Jan 2024

Hong Kong stocks surged for a second day, fuelled by China’s decision to inject 1 trillion yuan (US$140 billion) of liquidity next month to spur lending and shore up market sentiment. Alibaba Group jumped by the most in six months on insider buying.

The Hang Seng Index gained 3.6 per cent to 15,899.87 on Wednesday, adding to the 2.6 per cent rally on Tuesday from a 15-month low. The Tech Index jumped 4.2 per cent, while the Shanghai Composite Index rose 1.8 per cent, the most in over six months.

Top lenders ICBC climbed 3.6 per cent to HK$3.74, while peer China Construction Bank gained 3.9 per cent to HK$4.58. HSBC rose 1.3 per cent to HK$59.95, while insurer AIA Group strengthened 2.7 per cent to HK$62.90. China Unicom advanced 8.3 per cent to HK$5.21, and SMIC added 2 per cent to HK$15.50.

The People’s Bank of China will lower banks’ reserve requirement ratio by 50 basis points on February 5, Governor Pan Gongsheng said in Beijing, in a move seen as quelling market panic. The cut will unleash more money into the financial system, allowing commercial banks to lend more and revive spending and growth.

The decision followed a quarter-point cut in September and came after Premier Li Qiang this week called for more forceful measures to help stabilise stock prices. More than US$1 trillion of value has been erased from equities listed in Hong Kong, Shanghai and Shenzhen this year before Li’s statement on late Monday.

“Short term rebound is reasonable given the low level of index,” said Willer Chen, a senior analyst in Hong Kong at Forsyth Barr Asia, an advisory firm focused on China markets. “Only real macro recovery can support the market in a more sustainable way” and cause investors not to sell into the rally, he added.