Hong Kong stocks rose to the highest level in more than eight months as recent progress in late-stage trials for a Covid-19 cure prompted traders to chase US and Asian stocks to new heights.

The Hang Seng Index closed 0.1 per cent higher to 26,415.09, the highest level since March 5. The increase raised the index to within 353 points or 1.33 per cent of erasing the slump induced by the coronavirus outbreak. Some 32 index members rose while 17 declined.

US biotech firm Moderna said on Monday that its experimental vaccine was 94.5 per cent effective in preventing Covid-19.

The results followed the 90 per cent efficacy recorded by a vaccine candidate developed by Pfizer and its German partner BioNtech, announced last week.

“The HSI and US stocks are at a high level now, so investors are hesitating whether they will continue to rally,” said Gordon Tsui, chairman of Hantec Pacific and president of Hong Kong Securities Association.

US stocks rallied overnight, with the Dow Jones Industrial Average surged to a record high. The MSCI Asia-Pacific Index rose for an 11th straight day through Monday to an all-time high.

“Investors are looking further ahead in the pandemic development into 2021, instead of focusing on the very challenging outbreak that is taking place in the US and Europe now,” Tai Hui, chief Asia market strategist at JPMorgan Asset Management in Hong Kong, said in a note to clients. “Overall, we still think the global economy is in an early phase of the recovery cycle and hence we are constructive on risk assets.”

Sectors and companies that were hardest hit by the coronavirus pandemic are rebounding by big margins as traders expect a faster economic reopening and recovery on the vaccine news. PetroChina surged 4.6 per cent to HK$2.53 and CK Hutchison added 5.2 per cent to HK$58 while Geely Auto jumped 1.2 per cent to HK$21.10.

Xiaomi lost 4.4 per cent to HK$24.10 on concern about competition, after news that rival Huawei Technologies Co. Technologies sold its entry-level smartphone business Honor to a consortium of Chinese state-controlled firms.

“The longer-term market is a vaccine-driven one,” said Stephen Innes, chief global markets strategist at Axi. “With multiple high efficacy vaccines in the pipeline, there is good chance mobility will return close to pre-pandemic levels later in 2021.”

The Shanghai Composite Index edged down 0.2 per cent to 3,339.90. The tech-heavy ChiNext in Shenzhen fell 2 per cent. Biotechnology stocks led the decline. Guanhao Biotech plunged 9.6 per cent. Fosun Pharmaceutical Group shed 7.6 per cent.

Port and shipping stocks extended gains from Monday, after China together with another 14 nations in the Asia-Pacific region signed the Regional Comprehensive Economic Partnership, the largest regional free-trade pact in the world. COSCO Shipping and Jiangsu Lianyungang Port surged by the daily limit of 10 per cent on the mainland.

In new listings, display device manufacturer TES Touch Embedded Solutions (Xiamen) surged by the daily cap of 44 per cent to 33.96 yuan in Shenzhen. In Hong Kong, Jinke Smart Services Group traded flat at HK$44.70, while Sunkwan Properties Group gained 0.9 per cent to HK$2.30.

Hong Kong’s newest batch of inflation-linked bonds rose 2.8 per cent to close at HK$102.75 per unit on its first day of trading on the Hong Kong exchange.

The bond has a guaranteed annual coupon of 2 per cent. A total of HK$1.6 billion worth of iBond changed hands, about a tenth of the overall issuance of HK$15 billion.

In the past six instalments of the iBonds from 2011 to 2016, the securities rose by between 3.2 per cent and 6.7 per cent on the first trading day.