(Bloomberg) — Chinese shares in Hong Kong rose as traders returned from a two-session break, tracking Monday’s gains in onshore stocks on fresh signs of an economic recovery.
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The Hang Seng China Enterprises Index increased as much as 2.7%, with Xiaomi Corp. and Trip.com Group Ltd. leading the pack. Smartphone giant Xiaomi surged 16% at one point after its first electric vehicle drew strong demand.
The HSCEI is now close to 20% higher from a Jan. 22 low.
The latest gains help support the view that Chinese shares have bottomed out after a rout earlier in the year and the rally since then may have legs, given more economic green shoots from a manufacturing sector rebound to strong exports and rising consumer prices. Some global funds are starting to buy into the narrative that Beijing’s policy support will be enough to revive growth, with a popular equities strategy to “buy India, sell China” likely having reached an inflection point.
“Expectations are so low that any sign of economic revival is bound to trigger some buying,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Given the low investor positioning this will drive a strong rebound but longer-term issues remain so there will be people looking to sell into the rally.”
(Updates with price moves and comments)
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