JP Morgan: Hong Kong stocks rebound may be driven by short covering.

After the People's Bank of China announced a package of stimulus measures, the Hang Seng Index closed up 4.13% on Tuesday. JPMorgan Chase said that short covering may have been one of the reasons for the sharp increase in the Hong Kong stock market on Tuesday. Strategists, including Wendy Liu, wrote in a report that on Tuesday, the short selling transactions in Hong Kong accounted for 13.6% of the total market turnover, down from 15%-22% last week, indicating that many short positions have been covered. On the news front, a series of positive signals were released at a press conference held by the State Council Information Office on Tuesday morning: the reserve requirement ratio will be reduced by 0.5 percentage points in the near future; interest rates on existing housing loans will be lowered, and the minimum down payment ratio for housing loans will be unified; new monetary policy tools will be introduced to support the development of the stock market; guidance will be issued to promote the entry of medium and long-term funds into the market, and improve the investment policy system for national social security funds and basic pension insurance funds; strong support will be provided for listed companies to carry out cross-industry mergers and acquisitions with the goal of transformation and upgrading, and for the acquisition of non-profitable assets; the guidelines for market value management of listed companies will soon be consulted... Furthermore, JPMorgan Chase strategists are concerned that the rebound driven by stimuli may not be sustainable, "large-scale allocation may be very cautious, especially before the U.S. election."