Asian stocks rebound, Hong Kong leads gains on ‘Big Short’ bets

By Ambar Warrick

Investing.com -- Asian stock markets recovered sharply from recent losses on Thursday as affirmations of more Chinese stimulus boosted regional sentiment, with Hong Kong’s Hang Seng index leading gains after Micheal Burry’s Scion Asset Management was seen buying heavily into local players.

The Hang Seng index surged over 2% and was the best performer for the day. The index was largely supported by stellar gains in internet giants JD.com (HK:9618) and Alibaba Group Holding Ltd (HK:9988), which rallied over 7% and 3%, respectively.

Burry, who had famously shorted the 2008 subprime mortgage crisis, opened positions totaling over $8 million in Alibaba (NYSE:BABA) and JD (NASDAQ:JD) in the fourth quarter of 2022, Scion Asset Management’s latest 13F filing showed.

The positions likely reflect optimism over an economic reopening in China, as well as easing government scrutiny against the company’s biggest technology firms. The Hang Seng index has rallied over 45% since November as China began withdrawing anti-COVID measures.

Broader Asian markets were also buoyed by a recovery in technology stocks. South Korea’s KOSPI and the Taiwan Weighted index rose 1.8% and 0.9%, respectively, while China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes added 1% and 0.8%, respectively.

The People’s Bank of China said it will undertake more measures to boost economic growth this year, and will also shore up lending as the economy recovers from three years of COVID-related disruptions, state media reports showed.

Optimism over a Chinese economic recovery was also aided by data showing that new home prices rose slightly in January from the prior month. But on a year-on-year basis, Chinese house prices slid 1.5%.

A recovery in China bodes well for broader Asian markets, given the country’s role as a key trading hub for the region. Optimism over China also helped regional markets look past better-than-expected U.S. retail sales and inflation data, which likely heralds more interest rate hikes by the Federal Reserve.

Asian stocks were nursing steep losses this week amid growing fears of a more hawkish Fed, especially after the inflation reading.

Australia’s ASX 200 index recovered sharply from a steep fall on Wednesday, as weaker-than-expected employment data ramped up hopes that the Reserve Bank will lack sufficient economic headroom to keep raising interest rates.

National Australia Bank Ltd (ASX:NAB), one of the country’s largest lenders, rose 1% after it logged a 19% jump in its quarterly profit. But the stock was still nursing a 3.4% loss this week, amid growing fears of a credit slowdown in Australia.