In this Jan 5, 2024 photo, people walk past Exchange Square, which houses the Hong Kong Stock Exchange, in Central, Hong Kong. (SHAMIM ASHRAF / CHINA DAILY)

Hong Kong stocks soared to their highest level in three months on Tuesday, as a series of recent policies supporting economic growth along with a rise in February’s consumer prices boosted investors’ sentiment.

The Hang Seng Index logged its third consecutive day of gains, closing at 17,093.50 on Tuesday, 3.05 percent higher than a day earlier. The Hang Seng Tech Index jumped by 4.64 percent to 3,643.91, surging more than 20 percent from its low at the end of January.

Stocks in tech and property sectors led the gains. Smartphone-maker Xiaomi soared by 11.34 percent to HK$14.92 ($1.91), and e-commerce giant JD.com climbed 7.86 percent to HK$106.3

Stocks in tech and property sectors led the gains. Smartphone-maker Xiaomi soared by 11.34 percent to HK$14.92 ($1.91), and e-commerce giant JD.com climbed 7.86 percent to HK$106.3.

Longfor Group surged 14 percent, to HK$10.84, while China Resources Land advanced 10.49 percent, to HK$24.75.

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“The upswing is not attributable to factors of a single day but is the result of a suite of positive developments over recent months that have, in concert, bolstered investor confidence,” First Shanghai Securities chief strategist Linus Yip Sheung-chi said.

“The hike in consumer prices has alleviated investor concerns about deflation,” he added.

The latest data released by the National Bureau of Statistics on Saturday revealed that China’s consumer price index rose by 0.7 percent year-on-year in February, reversing four consecutive months of decline.

Earlier in the year, the People’s Bank of China, China’s central bank, announced it would cut banks’ reserve requirement ratios by 50 basis points starting Feb 5, pumping 1 trillion yuan ($139.4 billion) of long-term liquidity into the market.

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Dickie Wong, executive director of research at Kingston Securities Ltd, struck an optimistic tone about the upward trend of the Hong Kong stock market, citing that “its stock valuation is severely underestimated”.

The optimism is also fueled by the central government‘s target of 5 percent economic growth for the country this year, coupled with the rise in the consumer price index in February, he said.

“Besides, with the US Federal Reserve expected to lower interest rates as early as June, we could see further support for the appreciation of Hong Kong share prices,” Wong added.

However, Francis Kwok Sze-chi, vice-chairman of the Hong Kong Institute of Financial Analysts, said the current rebound momentum in Hong Kong stocks is primarily due to technical factors, as the real economy is yet to show signs of recovery.

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Hong Kong’s economy grew by 3.2 percent last year from a contraction in 2022.

On the mainland, Shanghai Composite Index dipped by 0.4 percent to end at 3055.94. Shenzhen Component Index edged up 0.51 percent to finish at 9630.55.

tianyuanzhang@chinadailyhk.com