Hong Kong shares surge on policy support; China slips

Hong Kong stock market update: Hong Kong stocks rallied on Monday following a boost from policy support, while Chinese shares experienced a decline. The surge in Hong Kong came as investors welcomed the China securities regulator's efforts to enhance the city's position as a global financial hub, despite a slip in Chinese shares.

The China Securities Regulatory Commission (CSRC) announced on Friday its intention to promote Hong Kong's status as a global financial center by facilitating listings of leading Chinese companies in the city and expanding the Stock Connect cross-border investment scheme. The initiative also includes broadening the investment link between mainland China and Hong Kong to encompass real estate investment trusts (REITs) and yuan-denominated stocks listed in Hong Kong. Additionally, the CSRC plans to lower the bar for exchange-traded funds (ETFs) under Stock Connect.

Meanwhile, Asian stocks recovered on Monday, accompanied by a rise in bond yields, as concerns about a wider conflict in the Middle East eased. Iran's announcement on Friday that it had no plans to retaliate following an Israeli drone attack within its borders contributed to the improved sentiment.

At the close of trading, the Hang Seng index surged by 1.77 per cent to 16,511.69 points, while the Hang Seng China Enterprises index rose by 1.47 per cent to 5,831.26 points. In contrast, China's main Shanghai Composite index closed down by 0.67 per cent at 3,044.60 points, and the blue-chip CSI300 index ended down by 0.3 per cent.

Sector-wise, the energy shares sub-index on the Hang Seng dipped by 2.7 per cent, while the IT sector rose by 3.77 per cent, the financial sector ended 1.64 per cent higher, and the property sector saw a gain of 1.56 per cent.

In China, the smaller Shenzhen index ended down by 0.49 per cent, and the start-up board ChiNext Composite index was weaker by 0.315 per cent.

The top gainer on the Hang Seng was Sino Biopharmaceutical Ltd, which surged by 8.55 per cent, while the biggest loser was Li Auto Inc, which fell by 8.33 per cent.

Across the region, MSCI's Asia ex-Japan stock index was firmer by 0.83 per cent, while Japan's Nikkei index closed up by 1 per cent.

(With Reuters inputs.)