Hong Kong stocks jump after China industrial profits rise, eyes on Politburo meeting

The Hang Seng Index gained 1.1 per cent to 17,213.67 as of 10am local time, the biggest jump in a week. The Hang Seng Tech Index added 0.7 per cent and the Shanghai Composite Index was little changed.

Tencent jumped 1 per cent to HK$357.80, e-commerce company Alibaba jumped 3.6 per cent to HK$75.70 and peer JD.com added 1.1 per cent to HK$103.40. Insurer AIA advanced 1.6 per cent to HK$52.55 and HSBC gained 1 per cent to HK$66.85, leading gains in the financial sector.

Before today’s gains, the city’s benchmark index had retreated 3.9 per cent in July, heading for its biggest monthly pullback since January. Underwhelming policy responses at the Third Plenum and shaky economic fundamentals prompted investors to offload local shares.

This decline pushed the Hang Seng Index’s 14-day relative strength index to near 30 on price charts, a reading that signals stocks are oversold.

“The market has approached support levels after the recent significant correction,” Kevin Liu, equity strategist and managing director at CICC, said in a note on Sunday. “Barring any unexpected shocks, there’s a possibility that the market could stabilise at this position.”

The meeting is expected to have a more significant impact on market expectations than the third plenum conclave last week, when leadership focused on medium- and long-term goals but placed an unusual emphasis on Beijing’s commitment to meeting its near-term goal of “around 5 per cent” annual growth in gross domestic product (GDP), according to analysts.

“We expect policymakers to remain cautious on growth headwinds, reinforce their easing stance and signal more policy support for the remainder of this year, especially on the demand-side such as fiscal and housing easing,” analysts at Goldman Sachs said in a note.

Meanwhile, the US monetary policy remains in focus with the Federal Reserve likely to provide further indications about its plan to cut benchmark interest rates in September at the conclusion of its meeting on Wednesday.

Other major Asian markets advanced ahead of central banks’ rate decision this week. Japan’s Nikkei 225 surged 2.7 per cent, while South Korea’s Kospi added 1 per cent and Australia’s S&P/ASX 200 gained 0.9 per cent.