Chinese stocks in US jump as new stimulus lifts investor mood
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CHINA stocks listed in the US are on track for a fourth straight day of gains, following a strong rally by their peers in Asia, as Beijing’s pledges of fresh stimulus help lift investor sentiment.
Shares of US-listed tech giants including Alibaba Group, JD.com and Pinduoduo all rose at least 3.5 per cent in premarket trading on Thursday (Aug 25). Meanwhile, NetEase rose 2.6 per cent, while electric-vehicle makers Nio and Li Auto addded 2.7 per cent and 2.0 per cent respectively. The Nasdaq Golden Dragon China Index is set to extend its winning streak after rallying during each of the first 3 trading days this week.
The strong moves in US trading follow what was the best day in nearly 4 months for Hong Kong’s Hang Seng Tech Index, which rose 6 per cent on Thursday. That helped lead the city’s benchmark Hang Seng Index to a 3.6 per cent gain, making it the best performer among Asia’s major equity gauges.
In addition to the Chinese government’s 1 trillion yuan (S$202.8 billion) of support for the economy, traders cited short covering, an adjustment of positions ahead of Jackson Hole, and speculation that the US and China are nearing a deal on their auditing spat as reasons behind the rebound.
“Growth, tech and offshore listed China stocks are leading gains suggesting that Fed meeting may be playing a bigger role in the late day move,” said Marvin Chen, a strategist with Bloomberg Intelligence.
Stocks in Hong Kong had slumped to the lowest in months this week, as global risk-off sentiment spread ahead of the Federal Reserve’s Jackson Hole symposium. Concerns over China’s economic growth, with a deepening property crisis and power shortages spurred by a severe drought, had added to the gloom.
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Following 3 days of losses, the Hang Seng Index was also looking ripe for a rebound to some market watchers based on various technical indicators.
The gauge was near “oversold” levels on monthly measures of the relative strength index, approaching the 30-threshold that has never been reached in data going back to 1972. Morgan Stanley strategist Gilbert Wong said: “The risk of short squeeze in China and Hong Kong equities is rising.” BLOOMBERG
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