Illustration: Liu Xiangya/GT

Hong Kong's stock market has seen a substantial rebound as sentiment improves, with the benchmark Hang Seng Index closing 2.2 percent higher at 17,201.27 points on Wednesday, breaking above the key psychological level of 17,000 points.

The bullish sentiment has provided ammunition against the bears. 

First, economic fundamentals support the stock market's gains. The Chinese mainland economy made a stronger-than-expected start to the year. The healthy and stable growth is seen as a positive sign for the Hong Kong Special Administrative Region (HKSAR), a gateway to the vast mainland market. 

Second, tech stocks have led the gains in recent months as an optimistic economic outlook sparked investors' passion for high-tech companies. In Hong Kong, the finance and property sectors once dominated the stock market in terms of capitalization, but the situation has changed in recent years, and the weight of tech stocks has been on the rise. 

Traders are keeping close tabs on corporate results, with the earnings season in full swing. 

Major Chinese internet firms have reported sound revenue growth for 2023, boosted by the use of advanced technologies like artificial intelligence, as well as measures to reduce costs and raise efficiency. 

Some of China's leading internet companies are listed in Hong Kong. 

For instance, Tencent in March reported better-than-expected financial results for 2023. The internet giant reported 609 billion yuan ($86 billion) in revenue, up 10 percent year-on-year. Net profit stood at 157.7 billion yuan, up 36 percent.

China's digital economy has boomed in recent years. The government has rolled out policies aimed at reducing private enterprises' burdens, optimizing the business environment and increasing financial support. 

The revival of the internet sector has sent an encouraging signal to Hong Kong's stock market, where many of China's biggest internet companies are traded. 

The Hang Seng Tech Index, which represents the 30 largest technology companies listed in Hong Kong, gained 3.61 percent on Wednesday, taking its advance from a January low to more than 15 percent.

Mainland internet companies will continue to serve as an impetus to Hong Kong's market, thanks to measures rolled out to make it easier for mainland companies to list in Hong Kong. 

The China Securities Regulatory Commission (CSRC) on Friday announced measures to boost cooperation between the capital markets of the mainland and the HKSAR, aiming to support Hong Kong in strengthening its position as an international financial center. 

The CSRC said that it would enhance its communication and coordination with relevant departments to support qualified mainland industry leaders wishing to go public in Hong Kong.

With the support of these measures, Hong Kong stocks are likely to receive capital inflows, which will improve market liquidity and stability in Hong Kong's stock market. The possible listing of Chinese mainland industry leaders, especially high-tech companies, in Hong Kong can help enhance the competitiveness and attractiveness of the stock market.

The Hong Kong stock market still faces multiple challenges. 

Macro factors including uncertainty about global economic prospects, the unstable geopolitical situation and a high interest rate policy adopted by the US and EU may easily cause fluctuations in Hong Kong's stock market. 

However, the recent rebound in the Hong Kong stock market signals a positive start. That's beneficial to Chinese companies by offering a good option for IPOs, and it also provides new opportunities for global investors.

International funds are expected to continue to flow into the Hong Kong stock market, further strengthening the position of the city's bourse among global capital markets and enhancing Hong Kong's status as an international financial center.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn