(Bloomberg) — Chinese shares listed in Hong Kong advanced Wednesday, extending a stimulus-induced rally as traders returned from a public holiday.
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The Hang Seng China Enterprises Index climbed as much as 4%, extending its winning streak to 13 days, the longest run of gains since January 2018. Chinese property developers led the gains with a gauge tracking the sector leaping as much as 17%. The Hang Seng Index rose 3.3%. Mainland Chinese markets remain shut until Oct. 8 for a week-long public holiday.
The extended rally signals continued optimism about China’s economy and risk assets after the authorities last week unveiled a range of stimulus measures that included interest-rate cuts, freeing-up of cash for banks, and liquidity support for stocks. Four major cities also eased home-buying curbs and the central bank moved to lower mortgage rates.
The rally “reflects a fundamental shift in investor positioning as hedge funds and mutual funds, which had previously been underexposed, are now moving into Chinese assets,” said Billy Leung, an investment strategist at Global X Management in Sydney.
In a sign of surging investor interest, hedge funds are piling into Chinese stocks at a record pace. US-based Mount Lucas Management has entered into bullish positions on China exchange-traded funds, while Singapore’s GAO Capital and South Korea’s Timefolio Asset Management are buying Chinese large cap stocks. Tribeca Investment Partners in Sydney is snapping up proxies such as Australian miners.
“If we think about the various things that needs to be addressed to fully restore confidence — consumption, property, LGFV indebtedness — it does require a massive effort if the government truly means it to do ‘whatever it takes,’” said Xin-Yao Ng, director of investment at abrdn Asia Ltd. “The market is already suggesting that investors are taking their words, the ball is on Beijing’s court to prove it.”
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