Hong Kong stocks soar after China’s market regulator pledges support for city’s IPOs, connect schemes
Hong Kong stocks extended gains after China’s market regulator unveiled a series of market reforms aimed at enhancing the city’s status as a financial hub, with sentiment getting a boost from the prospect of a bigger investor base following the changes.

The Hang Seng Index rose 1.74 per cent to 16,506.66 at the noon trading break. The Tech Index rose 1.95 per cent, while the Shanghai Composite Index fell 0.5 per cent.

Among the most heavily traded were gaming giant Tencent, which rose 4.6 per cent to HK$317.80 and food delivery company Meituan which jumped 4.9 per cent to HK$100. E-commerce behemoth Alibaba was up 3.2 per cent at HK$68.80. Prominent among losers were Li Auto which fell 6.4 per cent to HK$99.55 after the discount war intensified in the world’s biggest electric vehicle market, with Tesla cutting the prices of its Shanghai-made vehicles by more than 5 per cent in mainland China.

Oil stocks slumped after crude prices retreated on US inventories and a cooling of Middle East tensions. Offshore oil and gas major CNOOC fell 1.9 per cent to HK$18.26 and PetroChina, Asia’s largest oil and gas producer, slumped 2.3 per cent to HK$7.32.

The China Securities Regulatory Commission announced on Friday it will facilitate Hong Kong listings by leading Chinese companies and said it will expand the Stock Connect cross-border investment scheme to enhance the city’s status as an international financial centre.

“The central government fully supports Hong Kong’s long-term maintenance of its unique status and advantages,” the CSRC said in an announcement after markets shut on Friday, reiterating President Xi Jinping’s message that “it is necessary to consolidate and enhance Hong Kong’s status as an international financial centre”.

A Chinese national flag flutters outside the China Securities Regulatory Commission (CSRC) building on the Financial Street in Beijing, China July 9, 2021. Photo: Reuters

Edith Qian, equity strategist at CGS International Securities, said these efforts “should widen the investor base, encourage incremental fund inflow to the Hong Kong stock market, and further enhance stock liquidity”.

“Nevertheless, we still see ample room for further enhancing the scheme, such as introducing block trading, allowing for IPO subscriptions, and including secondary listed stocks,” she said in a report.

The People’s Bank of China (PBOC) kept the 1-year and 5-year loan prime rates (LPR) unchanged at 3.45 per cent and 3.95 per cent respectively on Monday. Analysts had expected this decision after the stronger-than-expected first-quarter economic data and given the priority given to currency stabilisation.

Asian markets were broadly higher. Japan’s Nikkei 225 Index rose 0.3 per cent, Korea’s Kospi advanced 0.8 per cent while Australia’s S&P/ASX 200 climbed 0.9 per cent.

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