Aug 29, 2023

Asian stocks rose on Monday, and US stocks posted a similar rise.

HK50 Weekly Chart

HK50: Weekly chart

The Hang Seng Index opened with a gap to break through the support level but closed lower. The rally in the US market could give another boost to Asian equities on Tuesday.

China’s latest round of market-boosting measures boosted markets on Monday, with the government halving stamp duty on stock transactions while restricting new share issuance and major shareholder divestment.

However, investment bank Nomura said it would not help the market much in the short term. Nomura said in a note on Monday that the measures announced late Sunday aimed at boosting investor confidence were only a follow-up to the Politburo meeting plan at the end of last month and did not represent a substantial increase in policy support.

“If these measures are not followed by measures to support the real economy, the impact will be short-lived,” the analysts said. “Without additional, more aggressive policy stimulus, a policy focused solely on equities alone will have little sustainable positive impact on equities, let alone any positive impact on the economy.”

Nomura’s comments contrasted sharply with those of Chinese brokerages, with both Guotai Junan Securities and Soochow Securities saying the measures would increase risk appetite and push up stock valuations.

The real results will be revealed in the coming weeks, with Hong Kong’s stock market posting its biggest gain in five weeks on Monday. Problems in the real estate industry remain acute, with Evergrande shares opening for the first time in 17 months and shares down more than 78 percent.

The company’s financial position improved, with losses attributable to shareholders reaching 33 billion yuan ($4.5 billion) in the first half of the year, down 50 percent from a year earlier. Revenue increased 44% from the same period last year to RMB 128.2 billion (US$17.6 billion).

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