Hong Kong stocks started in the best way since 2018 on hopes of a recovery in China

Hong Kong shares started 2023 with the biggest gains they have seen in the first trading session since 2018.

the Hang Seng Index On Tuesday, it rose 1.84%, or 363.88 points – its biggest first-day gain since January 2018, when the index rose nearly 2%.

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This points to an improvement in the outlook as China continues to reopen despite an increase in infections nationwide.

“While it is inevitable to see more large-scale surges and reversals in the first phase of the opening, the outlook for the Chinese economy has gotten much brighter for 2023,” said Redmond Wong, Saxo Capital Markets China’s largest market strategist said in a note.

“In addition to reopening, China has stepped up efforts to shore up its struggling real estate sector and given real estate developers access to credit and equity financing that they have been denied for most of 2022,” Wong wrote.

Real estate and technology stocks continued to lift the Hang Seng, which rose more than 3% in Wednesday’s session. The index surpassed 20,600, its highest level since July 29, according to Refinitiv data.

Shares of Chinese real estate developers listed in the city soared: country park jumped more than 7%, Longfor group Profit of approximately 12% and Seifi Holding Group It jumped 13% on Wednesday.

Moves followed reports of Chinese officials plan to provide more political support to struggling real estate developers.

Technology stocks also rose, with shares Ali Baba rose 8% after Chinese regulators Ant Group agreedA plan to double its registered capital, a sign of progress in resolving regulators’ concerns.

electric car maker Baidu rose more than 8%; Chinese video and game app Bilibili gained nearly 9%; netease rose more than 5%; JD.com jump 7%; And the Tencent It also increased by about 4%.

The Hang Seng rally came after Chinese Finance Minister Liu Kun said Xinhua in an interview That there will be more fiscal policy support.

The minister was quoted as saying that the government will work to expand and improve the “effectiveness of the proactive fiscal policy to face the multiple challenges ahead”.

Chinese investment bank Guotai Junan Securities said the performance of Hong Kong stocks will affect the broader global market.

“The Hang Seng Index may lead other major global stock indices in 2023, with a return of about 30% expected,” analysts at the company said in a note on Wednesday.

“The valuation of the index may see further adjustments, and we expect the HSI to recover to its previous level before June 2022,” they said in the note.