(Bloomberg) -- Chinese shares in Hong Kong rallied as trading resumed after holidays, playing catchup to gains seen in the onshore market following upbeat economic data.

The Hang Seng China Enterprises Index jumped 2.6% in Tuesday’s session. The gauge, which tracks major Chinese firms listed in the Asian financial hub, is now close to taking its gains from a Jan. 22 low to 20%. A benchmark of mainland equities climbed on Monday after data over the weekend showed the official manufacturing purchasing managers index in March registered its highest reading in a year.

The extension of the rally is lending credence to the view from some investors that Chinese shares have bottomed out after a yearslong rout, and policy support will be enough to revive the economy. Lazard Asset Management, Manulife Investment Management and Candriam Belgium NV are among global funds pivoting to China while paring their exposure to Indian stocks after a record-breaking rally.

“I strongly believe that the onshore and Hong Kong stock markets are already bottoming out and the rebound could continue into the second quarter,” said Dickie Wong, director of research at Kingston Securities Ltd. “The valuations are really cheap, positioning is still light, we just need more policy catalysts to boost the sentiment.”

The manufacturing data was the latest economic green shoot alongside strong exports and rising consumer prices, boosting optimism about the country’s ability to achieve its ambitious growth goal of around 5% this year.

At the same time, Beijing has taken a series of steps to lift investor mood, including purchases by state funds, a clampdown on quantitative funds and restrictions on sales, along with fresh moves to ease the nation’s housing crisis.

Smartphone giant Xiaomi Corp. was among the biggest gainers on the HSCEI gauge on Tuesday, surging 16% at one point after its first electric vehicle drew strong demand. The Hang Seng Tech Index also jumped 1.9%.

A Pacific Investment Management Co.’s quantitative fund that delivered returns despite China’s slumping stock market is turning to beaten-down tech giants. Internet platform companies such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd. have become attractive after years of regulatory crackdown reduced valuations to historical lows, Chris Brightman — chief investment officer at Research Affiliates LLC — who co-manages some Pimco funds, said in an interview last week.

To be sure, the HSCEI is still down about 23% from a peak recorded during the reopening rally last year. A more sustainable climb may hinge on a confluence of factors, ranging from Beijing’s success in tackling its property woes to the magnitude of further fiscal or monetary easing and reduced tensions with the US. Corporate earnings too have been mixed, with investment banks holding back from re-rating the market.

The onshore benchmark CSI 300 Index dropped 0.4% on Tuesday after rising 1.6% in the prior session.

“With reducing expected return for the US market, investors might be looking for places with better valuation like the Chinese one,” said Thomas Ip, executive director at Gaoyu Securities Ltd., who is cautiously optimistic on the market and expecting more stimulus policy to come out within this year.

(Updates with Tuesday’s closing prices)

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