By Steve Goldstein
Chinese- and Hong Kong-listed stocks soared on Wednesday after China’s government pledged to support beleaguered markets.
The Hang Seng /zigman2/quotes/210598030/delayed HK:HSI -1.18% surged 9% as state-run Xinhua News Agency said the government would take a number of market-friendly steps .
The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.66% rose 3.5%.
China’s financial stability and development committee called for monetary policy to support the economy, and that authorities should prudently introduce policies that have a contractionary impact.
The Chinese government also is working with U.S. authorities to support listings overseas, as the Securities and Exchange Commission last week identified Chinese companies that could be delisted over the issue of auditor access.
JD.com /zigman2/quotes/218934055/delayed HK:9618 -3.39% /zigman2/quotes/205122565/composite JD -2.17% jumped 36%, Alibaba /zigman2/quotes/215112034/delayed HK:9988 -3.03% /zigman2/quotes/201948298/composite BABA -2.37% rallied 27% and NetEase /zigman2/quotes/218787563/delayed HK:9999 -1.84% /zigman2/quotes/201683625/composite NTES -1.77% surged 23% in Hong Kong trade.
The committee also said it would keep Hong Kong’s financial markets stable while enhancing regulatory communications and coordination with Hong Kong regulators.
“Having disappointed markets earlier in the week by not cutting interest rates, China’s state economic policy apparatus is taking significant coordinated steps to support risk sentiment. These include State Council support for overseas listings, engaging with the U.S. on ADRs, and perhaps most importantly, suggesting that regulation of its big tech firms will end soon. There are also promises to step-up support for the real estate sector,” said Stephen Innes, managing partner at SPI Asset Management.
Even with Wednesday’s surge, the Hong Kong index is down 14% this year, compared to the 11% drop for the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.72% .
The remarks didn’t address another factor that’s been weighing on Chinese stocks, the possibility of sanctions from the U.S. if the country provides arms to Russia.