HONG Kong stocks yesterday rose the most they have in three weeks, as rate cuts by the US Federal Reserve and other central banks eased concern that the worst financial crisis since the Great Depression will deepen.
The Industrial and Commercial Bank of China climbed 6.6 percent after the central bank reduced interest rates and said it would allow lenders to set aside smaller reserves to bolster growth.
Esprit Holdings, a clothing retailer that makes more than four-fifths of its sales in Europe, gained 4.1 percent.
"The rate cuts are clearly helpful," Howard Wang, who oversees US$10 billion at JF Asset Management in Hong Kong, told Bloomberg News. "I would say that one should begin investing more, but I would certainly not characterize the environment as safe."
The Hang Seng Index gained 511.51, or 3.3 percent, to close at 15,943.24, the biggest jump since September 19.
The measure fell 8.2 percent on Wednesday, bringing its 14-day relative strength index reading to 24. Some traders interpret a score of less than 30 as signaling stocks are poised to rise.
The Fed, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each reduced their benchmark rates by half a percentage point on Wednesday. The Bank of Japan, which didn't participate in the move, said it supported the action. Switzerland also took part. China's central bank separately cut its key rate by 0.27 percentage points and reduced the proportion of deposits set aside as reserves by 0.5 percentage points, starting October 15.
Banks in Taiwan and South Korea followed with rate cuts.
The Hong Kong Monetary Authority cut its base rate to 2 percent, tracking the US Federal Reserve's move.
ICBC, China's largest bank, gained 6.6 percent to close at HK$4.05 (US$0.52), rebounding from an 8-percent drop on Wednesday. The Bank of China, the nation's third--biggest lender, rose 5.4 percent to HK$2.73, after tumbling 6.5 percent yesterday.
HSBC Holdings, Europe's No.1 bank, gained 1.9 percent to HK$118, after saying yesterday it has "no current plans to utilize the UK recapitalization initiative."
The Hang Seng China Enterprises Index, which tracks Chinese companies, rose 3.9 percent to 7,743.47.