The ongoing inflow of capital has driven the Hong Kong stock market to six consecutive days of gains, with the Hang Seng Index surging over 6% at Wednesday’s close, reaching a 20-month high.

According to Hong Kong media reports, after a one-day break for China’s National Day holiday, the Hang Seng Index reopened on Wednesday, October 2nd, with a strong start, closing at 22,443 points, a significant increase of 1,310 points or 6.2%, marking the highest close since January 27 of last year. This rally has extended for six consecutive trading days.

Although mainland China markets were closed for the extended National Day holiday, and the Shanghai-Hong Kong Stock Connect was suspended from Wednesday through Monday, October 7th, funds continued to flow into the Hong Kong stock market. Despite the absence of mainland investors, Wednesday’s total trading volume in Hong Kong reached HKD 434.017 billion (SGD 72 billion).

Hao Hong, Chief Economist at Sirui Group, told Caixin that the Wednesday surge in Hong Kong stocks was likely driven by both mainland and Hong Kong funds. Given the mainland market closure, the optimism about future policy expectations is evident, and a significant influx of mainland funds into the Hong Kong market cannot be ruled out in the near term.

Additionally, Bloomberg reported that within just eight days, Chinese stocks had regained their emerging market dominance, which they had lost over the past ten months. By the eve of China’s National Day holiday on September 30th, the weight of Chinese stocks in the MSCI Emerging Markets Index had rebounded to 27.8%, the highest level since November 2023.

The report further noted that Chinese stocks have made a remarkable comeback in emerging markets, with their market capitalization surging by USD 3.2 trillion (SGD 4.12 trillion) since September 18th. This rally followed the U.S. Federal Reserve’s initiation of a rate-cutting cycle and the introduction of a series of stimulus measures by the Chinese government. Previously, due to the rapid rise of stock markets in India, Taiwan, and South Korea, the weight of Chinese stocks in the MSCI Index had been declining for months, resulting in their worst relative performance compared to other emerging markets in history.

（IRuniverse, Kasumi）

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