Hong Kong Stocks Up on Stimulus Hopes; Meituan and New World Lead

Hong Kong stocks rebounded, marking their third consecutive day of gains, as weak economic data from China fueled hopes for further stimulus measures from Beijing. Optimism surrounding an impending US Federal Reserve rate cut also lifted market sentiment.

The Hang Seng Index rose by 0.3% to 17,422.12 on Monday, recovering from earlier losses of up to 1.1%. The Tech Index also advanced by 0.5%. Mainland Chinese markets remain closed until Tuesday due to a public holiday.

Shares of the food delivery giant Meituan surged by 2.8% to HK$126.50, while Tencent gained 1.1%, reaching HK$379. Local developers led the rally, with New World Development soaring 5% to HK$6.75, Sun Hung Kai Properties up 1.5% to HK$79, and Henderson Land adding 1.5% to HK$23.80. Investors are closely watching the Fed’s upcoming rate decision, which is expected to provide further support to market liquidity.

China’s latest economic figures, including industrial production, retail sales, and fixed-asset investment, fell short of expectations for August. Additionally, credit growth slowed as demand from both households and companies waned. Economists believe these factors may pressure Beijing to implement further monetary easing to stimulate domestic demand.

Barclays economists, including Jian Chang, noted that the disappointing data could prompt the People’s Bank of China (PBOC) to introduce more easing measures soon. They anticipate a 50-basis-point cut in the reserve requirement ratio (RRR) for banks within the coming weeks, potentially followed by another half-point cut in the first half of next year.

Market expectations for a Fed rate cut this week are also boosting hopes for more flexibility from the PBOC, which could help improve liquidity in Hong Kong’s stock market. Traders currently estimate a 57% likelihood of a half-point rate cut at the Fed’s meeting this month, according to CME FedWatch.

Despite the overall gains, some stocks underperformed. Longfor Group dropped 1.8% to HK$7.87, and China Resources Land fell 2.1% to HK$19.18, amid reports of the steepest annual decline in home prices in China in nine years.

Elsewhere in Asia, Australia’s S&P/ASX 200 index gained 0.3%, while Japan and South Korea’s markets remained closed for holidays.