(Bloomberg) -- Bullish bets grew across stocks in Hong Kong as holiday spending and tourism data suggested a recovery is gaining traction in the city and mainland China. 

On the first trading day following the Lunar New Year break, the benchmark Hang Seng Index jumped 2.4% to close at its highest since March 1. The Hang Seng China Enterprises Index, which tracks mainland companies listed in Hong Kong, rallied almost 3%. The offshore yuan also strengthened against the dollar as onshore markets remain closed for the week.

Traders were emboldened by China’s holiday travel and box office data, which showed a strong revival in demand and suggested the nation has emerged from the worst of a Covid Zero exit wave. Investors have been keeping a keen eye on consumption figures from the nation’s most important holiday to gauge the strength of China’s economic recovery.  

READ: Hong Kong Rally Has Reasons to Go On After Break: Taking Stock

The holiday period also saw tourism rebound in Hong Kong and Macau as cross-border travel revved up. The gaming hub greeted almost 40,000 mainland visitors on the second day of the holiday, the most since the start of the pandemic, while Hong Kong’s daily passenger arrivals also jumped.

“We are tactically bullish on China stocks. I think what we might see in the months ahead is improvement in many of these activity indicators,” Chetan Seth, Asia-Pacific equity strategist at Nomura Holdings Inc. said in a television interview on Bloomberg. An earnings recovery will “give another kind of boost to stocks prices,” he added. 

The global equities backdrop is also supportive. Tech stocks drove US equities higher earlier this week as investors await the release of key earnings, and as comments by Federal Reserve officials dialed back fears of overly aggressive policy moves. The Nasdaq Golden Dragon China Index rose 1.4% over the past three sessions. 

With Thursday’s gains, the Hang Seng Index as well as the Hang Seng China gauge are set to rally for six straight weeks, boosted by the economic reopening and pro-growth policies. That would be the longest streak of weekly gains since January 2020, just before global markets started to collapse as the pandemic took hold. 

If the upbeat mood continues, the CSI 300 benchmark may enter a bull market when shares resume trading on Monday. The index has surged a little more than 19% since its late October trough.  

Onshore shares have trailed gains seen in Hong Kong in the latest rebound, suggesting they have more room to advance especially as offshore peers reach overbought levels. The Hang Seng China Enterprises Index’s relative strength index is at around 76, exceeding the 70 threshold that indicates an asset is technically overvalued.  

In the currency market, the offshore yuan advanced as much as 0.7%, its biggest gain since Jan. 9, to 6.7253 per dollar. Thin liquidity during mainland’s market closure amplified the move, while bearish dollar bets persisted.  

--With assistance from Aya Wagatsuma, Kathleen Hays, Paul Allen and Chester Yung.

(Updates with yuan moves in final paragraph.)

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