Hong Kong led a rally across most Asian markets Tuesday as traders were cheered by reports that Chinese authorities were considering a blockbuster boost to equities after a painful start to the year.
The surge came after another record day on Wall Street where optimism about the outlook for the US economy has taken the place of expectations for a string of interest rate cuts starting in March. The Hang Seng Index in Hong Kong piled on more than three percent in the morning session and Shanghai also pushed higher after it emerged that Premier Li Qiang had called for more "forceful" measures to support China's battered stocks, giving a shot in the arm to investor confidence.
Hong Kong has lost around 10 percent since the turn of the year and Shanghai more than seven percent on worries that officials were not doing enough to help the economy, which grew last year at its slowest pace since 1990, outside the pandemic years.
Authorities are looking at a raft of initiatives, Bloomberg reported, adding that policymakers were seeking to mobilise nearly $280 billion, mainly from the offshore accounts of state-owned enterprises.
"It sounds like something had been readied in response to the recent equity rout," Neo Wang, at Evercore ISI, said.
"The market was poor enough to warrant such elevated attention -- China cannot afford to see A-shares sinking toward the Lunar New Year holidays."
Saxo Markets' Redmond Wong added that investors were hoping for more measures at key upcoming meetings.
"Prevailing pessimism regarding the economy, policy efficacy, and reduced allocation to China by global and Asian equity funds persists," he said in a commentary.
"Bargain hunters remain on the sidelines, and technical rebounds might face selling pressure until more information emerges from the Third Plenum potentially in February and the Two-session meetings in March, shedding light on the trajectory of the Chinese economy."
