By Jiahui Huang and Sherry Qin


Hong Kong stocks rebounded on hopes that a rescue package from Beijing may be in the works for battered capital markets, even as analysts questioned whether the measures will be what China's broader economy needs.

The Hang Seng Index gained 2.6% on Tuesday, notching its biggest one-day percentage gain of the year. Technology and electric-vehicle stocks led gains, with the Hang Seng Tech Index closing 3.7% higher. Alibaba added 3.4% and JD.com rose 4.7%, while Li Auto advanced 6.5%.

Property stocks also rallied a day after the Hang Seng Properties Index fell to its lowest level since 2009. Longfor Group rose 9.2% and Country Garden ended 6.6% higher.

Hong Kong's benchmark index rose sharply following a report by Bloomberg that Beijing might seek to use about 2 trillion yuan ($278 billion) from offshore accounts of Chinese state-owned enterprises to buy onshore shares.

Bloomberg cited people familiar with the matter in the report, adding that some of the measures could come as soon as this week if approved by top officials. The report came a day after Chinese Premier Li Qiang called for efforts to stabilize capital markets in the world's second-largest economy.

A representative of the Chinese Finance Ministry declined to comment about potential stimulus measures when contacted by Dow Jones Newswires.

Analysts were largely skeptical that the possible stimulus would be enough to turn around one of Asia's worst-performing markets this year, questioning whether a core problem in China's economy is going unaddressed.

"The key is not about putting 2 trillion yuan or 4 trillion yuan [in the market], it's a lack of other policy changes, especially monetary policy," Hang Seng Bank chief economist Dan Wang said. She said that cutting interest rates sharply may be the only effective way to boost liquidity.

"This reminds me what happened in the second half of last year," said Tommy Xie, OCBC Bank's head of Greater China research and strategy, referring to a short-term rise in equities after Beijing introduced a handful of supportive measures last year.

"It is worth noting that in times of exceptionally bearish sentiment, the threshold for a positive surprise is relatively low," Xie said. "This may be in China's favor."

Hong Kong equities have been hit hard by concerns about the state of China's economy, including a prolonged property downturn, risk of deflation and local government debt. Investors have been pulling money out of Hong Kong in search of better yields and more security elsewhere in Asia, analysts said.

Saxo Markets chief China strategist Redmond Wong said Li's comments late Monday were viewed as a reiteration of the policies the Chinese government has emphasized since the official meetings last year. Li said at a State Council executive meeting that Beijing should take "more powerful and effective measures to stabilize the market and investor confidence," according to a government statement.

"I don't think it carries much weight for the stock market," Wong said.


Write to Jiahui Huang at jiahui.huang@wsj.com and Sherry Qin at sherry.qin@wsj.com


(END) Dow Jones Newswires

01-23-24 0654ET