Hong Kong stocks rally 1.9% as HSBC hits record high

Hong Kong stocks surged at midday, with the Hang Seng Index climbing 446 points as HSBC Holdings hit an all-time high and healthcare stocks led a broad-based rally.

The Hang Seng Index rose 446 points, or 1.9%, to 24,476 at midday, driven by a broad rally across technology, healthcare and financial stocks. The Hang Seng Tech Index climbed 127 points, or 2.7%, to 4,858.

"Both markets were driven by a technical rebound, as the recent sell-off was overdone," said Hong Hao, chief investment officer at Hong Kong-based Lotus Asset Management.

The Hang Seng China Enterprises Index added 145 points, or 1.8%, to 8,143. Xiaomi Corp. jumped 4.6% to HK$26.16, Alibaba Group Holding Ltd. rose 3.6% to HK$111.9, and Semiconductor Manufacturing International Corp. gained 3.9% to HK$86.8. HSBC Holdings advanced 1.4% to HK$154.4, marking a new all-time high. The gains tracked a rally in US chipmakers that fueled a rebound on Wall Street overnight, with lower oil prices further supporting risk appetite after reports that the US and Iran would continue technical talks.

The rally pared some of the Hang Seng Index's losses from earlier this week, when the benchmark fell 0.7% on Thursday to 24,030 as escalating Middle East tensions weighed on sentiment. Traders pointed to short covering and positioning ahead of corporate earnings as key drivers of the session's momentum. The CSI 300 Index of mainland Chinese stocks advanced 2.5%, while the yuan held steady against the dollar.

Healthcare and Auto Stocks Lead the Charge

Healthcare stocks dominated the gainers list. CSPC Pharmaceutical Group Ltd. surged 7%, WuXi AppTec Co. added 6.2%, and Sino Biopharmaceutical Ltd. rose 6.2%. Innovent Biologics Inc. gained 5.1%, while WuXi Biologics Inc. advanced 5.5%. Auto stocks also rallied broadly, with Geely Automobile Holdings Ltd. up 4.6%, BYD Co. gaining 4.2%, XPeng Inc. rising 3.4%, and Li Auto Inc. adding 3.3%. CKH Holdings Corp. was the top blue-chip gainer, jumping 7.7%. Tencent Holdings was the only major heavyweight in the red, edging down 0.5%.

Short Selling Data Points to Cautious Optimism

Short selling activity remained elevated, suggesting some investors are hedging against a potential reversal. BYD Co. saw short selling account for 47.5% of its trading turnover, while Alibaba Health Information Technology Ltd. recorded a short selling ratio of 40.6%. China Overseas Land & Investment Ltd. and China Resources Land Ltd. posted ratios of 37.6% and 39.1%, respectively, indicating persistent bearish bets on the property sector despite the broader rally. Xiaomi's short selling ratio stood at 37.7%, with HK$3.32 billion in short volume, while Alibaba's short selling reached HK$4.42 billion, representing 21.1% of its turnover.

The sustainability of the rally will depend on upcoming corporate earnings and whether foreign capital returns to Hong Kong markets. The Hang Seng Index remains about 3% below its 50-day moving average, suggesting the technical rebound still has room to run before facing resistance.

This article is for informational purposes only and does not constitute investment advice.