After a strong rally in Asia, the Chinese stocks listed in the US are on track for a fourth day of gains, as Beijing pledges of new stimulus help lift investor sentiment.
Shares of US-listed tech giants including Alibaba Group Holding Ltd., JD.com Inc. and Pinduoduo Inc. all rose by at least 3.5% in premarket trading Thursday. NetEase increased 2.6%, while electric-vehicle makers Nio Inc. and Li Auto Inc. added 2.7% and 2.0% respectively. The Nasdaq Golden Dragon China Index is poised to extend its winning streak after rallying during each of the first three trading days this week.
The US trading moves followed the best day in nearly four months for Hong Kong's Hang Seng Tech Index, which rose 6% on Thursday. That helped lead the Hang Seng Index to a 3.6% gain, making it the best performer among Asia's major equity gauges.
Short covering, a adjustment of positions ahead of Jackson Hole and speculation that the US and China are close to a deal on their auditing spat were also mentioned by traders as the reason behind the rebound, as well as the Chinese government s 1 trillion yuan $146 billion of support for the economy.
Marvin Chen, a strategist at Bloomberg Intelligence, said that the Fed meeting may be playing a bigger role in the late day move.
Stocks in Hong Kong had slumped to the lowest level in months this week, as global risk-off sentiment spread ahead of the Jackson Hole symposium of the Federal Reserve. Concerns over China's economic growth, with a deeperening property crisis and power shortages spurred by a severe drought, had added to the gloom.
After three days of losses, the Hang Seng Index was looking ripe for a rebound according to market watchers based on various technical indicators.
The gauge was close to oversold levels on monthly measures of the relative strength index, approaching the 30 - threshold that has never been reached in data going back to 1972. Morgan Stanley strategist Gilbert Wong said the risk of short squeezes in Hong Kong and China is rising.