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Hong Kong Investors Drive Up Stock Prices Amid Optimism for China’s Economic Recovery

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Hong Kong investors have bid up shares in anticipation of government stimulus measures that will boost China’s sluggish economy. The Hang Seng Index closed the week with a 1.6% gain, reaching 17,485.98.

During China’s National Golden Week Holiday, the country’s stock markets and banks were closed, providing investors with hope for increased consumer spending.

Trading volume in Hong Kong reached HK$60 billion ($7.7 billion) per day, which is approximately half of the weekly 12-month average volume.

A report from Goldman Sachs Group Inc. (GS) stated that China’s economic slowdown is reaching its end, following a similar report from Citigroup Inc. (C) claiming that the bottom has been reached for a slump in exports and weak consumer confidence.

Goldman’s economists wrote in their report, β€œWe expect growth and inflation to bottom out in the near term on stabilizing exports, less drag from inventory destocking, and increased policy offset.”

Property stocks and exporters experienced the most activity as investors bet that China’s economy is turning a corner. Hang Lung Properties Limited (HLPPY) rose 2.3%, Sino Land Company Limited (SNLAY) increased by 1%, and Country Garden Holdings Company Limited (CTRYY) leaped 3.5%. Sunac China Holdings Limited (SNCNF) also surged by 10.5% after successfully convincing a Hong Kong court to approve its $10.2 billion offshore debt restructuring proposals.

Consumer names Alibaba Group Holding Limited (BABA) and JD.com, Inc. (JD) saw gains of 1.5%. Tencent Holdings Limited (TCEHY) and AIA Group Ltd. (AAIGF) were also stronger by around 2% following their ongoing stock repurchasing programs on the Hong Kong Stock Exchange.

CNOOC experienced a slight decline after Bloomberg reported a seven-day delay in an offshore bond repayment due to the Chinese national holiday. Despite this, the bonds were trading at 99.99 cents on the dollar, indicating that investors were not concerned about any credit risk. The incident sparked discussions about what is considered a debt default in light of recent property share credit defaults. The bonds are stipulated to be repaid within two working days of the maturity date, according to a New York and Australian working week.

According to China’s largest business daily, Caixin, automaker NIO Inc. (NIO) is putting pressure on rival EV makers Tesla, Inc. (TSLA), Li Auto Inc. (LI), XPeng Inc. (XPEV), and BYD Company Limited (BYDYY) in China by increasing sales commissions for its agents. The minimum sales commissions paid to NIO sales representatives have more than doubled recently and contributed to the company achieving over 6 billion RMB in sales and surpassing 20,000 car sales in July.

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