Hong Kong's technology shares rallied on Monday, with the Hang Seng Tech Index jumping 2.25% to 3,839, as China's central bank prepared a 100 billion yuan (about HK$118 billion) swap operation that gives brokers, fund managers and insurers liquidity to buy stocks.

The broader Hang Seng Index rose 98 points, or 0.42%, to 23,393 on Nov. 2, according to The Standard, and added to those gains on Tuesday morning. For investors in Asia, the session showed where Beijing's support lands first: in the internet and hardware names that dominate the tech gauge, rather than in the state banks that make up much of the main index. Those banks fell hard on Monday, a split that left the benchmark well behind the tech index.

The move came after a rough month. As Capital Times reported, the Hang Seng fell 5.4% in October in a broad sell-off of AI-linked shares.

PBOC swap and rate shift set the tone

The People's Bank of China said on Monday it would run a swap facility operation for securities, fund and insurance companies on Nov. 3, Reuters reported. Thirty-one firms applied, and the allotment totaled 100 billion yuan. The tool lets those institutions obtain liquidity to buy stocks.

The central bank also formally made its overnight reverse repurchase rate its main policy rate on Monday, injecting 541 billion yuan through overnight operations at 1.25%. Analysts quoted by Reuters said the change lowers the floor of China's rate framework by 15 basis points. Zhaopeng Xing, senior China strategist at ANZ, described it as a targeted cut for lenders that should add about 5 basis points to their net interest margins, though he said it was unlikely to move the stock market much on its own.

Before the open on Monday, traders were waiting on a reported meeting between Chinese financial regulators and major banks on tools to steady capital markets, The Standard said. Credit worries tied to state-owned developer Zhuhai Huafa Group had unsettled mainland bonds in the days before, according to Reuters.

On Tuesday the PBOC took a separate step on the currency. It said it would raise the foreign-exchange reserve requirement ratio for financial institutions to 6% from 4%, effective Nov. 15, a move Reuters calculated would pull about US$24 billion out of the system. The yuan has gained more than 5% against the dollar this year.

Xiaomi, CATL and Alibaba lead; Hong Kong's banks slide

Xiaomi was the best performer among Hang Seng constituents on Monday, up 6.1%, followed by battery maker CATL with a 6% gain, according to The Standard. Alibaba rose 2.5% and Tencent 2.2%. Chipmakers added to the rally: Hua Hong Semiconductor climbed nearly 3% and SMIC rose 1.5%. Carmakers had opened higher after reporting strong October sales.

Casino operators also gained even though Macao's October gaming revenue declined. Galaxy Entertainment rose 3.7% and Sands China 3.1%.

Banks went the other way after reporting quarterly results last week. BOC Hong Kong dropped 5.7% and Bank of China 4.6%, the two worst performances in the index. China Merchants Bank fell 2.8% and ICBC 1.5%. Several of the big mainland lenders had opened slightly higher on Monday after posting third-quarter profit growth, before selling took hold.

Turnover on Monday came to HK$204.8 billion. On the mainland, the Shanghai Composite Index rose 1.08% to 3,638 and the Shenzhen Component Index gained 1.63%. The Hang Seng China Enterprises Index added 0.56% to 7,906.11, Bastille Post reported.

Tuesday: Hong Kong holds gains as Asia turns mixed

Hong Kong opened higher again on Tuesday and was up 121 points, or 0.52%, at 23,515 by the midday break, with half-day turnover of HK$115.2 billion, The Standard reported. The tech index was up 0.96% at 3,876 at noon.

The leadership shifted. Trip.com rose 2.8% at the open, while Lenovo fell 3.6%, the steepest early drop among blue chips. Oil producers slipped as crude prices eased: PetroChina fell 2.9% and CNOOC 2.6% at the open. Hua Hong and SMIC, Monday's gainers, dropped 2.6% and 1.4% in early trading.

Hong Kong was one of the few markets in Asia to rise on Tuesday morning, the Associated Press reported. South Korea's Kospi fell 2.5% as SK Hynix and Samsung Electronics gave back Monday's gains after a sell-off in U.S. technology shares, and Taiwan's Taiex slid 0.9%. The Shanghai Composite fell 0.71% to 3,612 by midday, according to The Standard, as the lift from Monday's measures faded on the mainland.

The next test is how much of the 100 billion yuan allotted in Tuesday's swap operation reaches equities, and whether mainland markets can hold the support that Hong Kong tech stocks priced in on Monday. The higher foreign-currency reserve ratio takes effect Nov. 15.