Hong Kong Shares Sharply Higher, Aiding Regional Sentiment

Asian stocks are tracking higher in the first part of Friday's dealings. Much of the focus remains on gains for Hong Kong stocks, the HSI up over 3% at this stage. The tech sub index is tracking more than 4% higher. The HS China Enterprise index is +3.60%.

• China mainland shares are also firmer, albeit with a lower beta, the CSI 300 last around +1%. Japan stocks are+1% for the Topix. Taiex +1%, the Kospi +0.80%, while SEA markets are more muted.
• In terms of drivers of these moves, there doesn't appear to be a single catalyst. As we noted earlier the Golden Dragon rallied 4% in US trade on Thursday so some positive spillover is clearly evident. This was amidst broadly positive gains in US/EU bourses, with the viewpoint of a Fed pause in June helping sentiment.
• Goldman Sachs is keeping its MSCI China OW but lowering the price target, is another positive.
• Value buyers may also be emerging given the extent of recent sell-offs (i.e the HSI and HS China Enterprise Index both moving 20% off Jan highs).
• Yesterday's Caixin PMI result may also be helping at the margin, given it halted the recent run of weaker than expected data outcomes.