Hong Kong’s stock market saw a remarkable surge of 541 points, equivalent to a 2.7% jump, bringing the Hang Seng Index to its highest level in 19 months during early trading on Friday. This rally, continuing from the prior session, comes in response to China's Reserve Requirement Ratio (RRR) cut by 50 basis points. The move, as announced by Governor Pan Gongsheng earlier in the week, marks the second RRR reduction this year and is designed to inject CNY 1 trillion into the economy. The funds released from this monetary measure aim to bolster economic activity, particularly as China prepares for its week-long holiday starting on October 1.

China’s fiscal support is anticipated to grow further, with expectations of additional measures being announced following a Politburo meeting on Thursday. These developments have been a boon to Chinese and Hong Kong markets, contributing to the Hang Seng’s impressive 12% surge for the week, making it the second consecutive week of gains. This bullish trend aligns with robust gains seen in Chinese markets, which are reflecting investor confidence in China’s economic recovery measures.

Another factor boosting the market is the positive momentum from Wall Street, where overnight gains added to the optimistic sentiment in Hong Kong. Investors are also keeping a close watch on the upcoming US Personal Consumption Expenditures (PCE) data, due later today, which may influence global markets.

Across all sectors, tech, consumer, and property stocks led the gains. Among the notable movers was China Mengniu Dairy, which surged by 14.0%, leading the charge. Close behind were Wuxi Biologics, which jumped 12.6%, and H World Group, up by 10.1%. Sands China also made significant strides with a 9.2% increase.

As we approach the China National Day holiday, the markets are poised for further excitement, and there could be additional economic stimuli in the pipeline. The Chinese government’s measures to enhance economic stability appear to be yielding positive outcomes, fostering a bullish outlook for investors in the Hong Kong and broader Chinese stock markets.

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