Alibaba, BYD lead stock gains in Hong Kong on China policy easing bets as Russia-Ukraine tensions subside

  • Producer prices and consumer inflation in mainland China cooled in January by more than economists expected, boosting chances for more easing measures
  • Hang Seng Index snaps a three-day slide as Alibaba and BYD lead the charge; PetroChina loses ground as oil tumbles

Hong Kong stocks snapped a three-day decline as inflation in China cooled, strengthening bets for more policy easing measures. Risk assets regained favour as military tensions between Russia and Ukraine subsided.

The Hang Seng Index gained 1.3 per cent to 24,665.22 at the local noon trading break, halting a 2.3 per cent slide over the past three days. The Tech Index jumped 1.9 per cent while the Shanghai Composite Index added 0.7 per cent.

BOC Hong Kong, car maker BYD and Macau casino operator Galaxy Entertainment topped gainers, climbing by at least 3.1 per cent. Alibaba Group Holding added 2.6 per cent before its earnings report next week. PetroChina led losers, slipping 1 per cent as crude oil tumbled.

Factory-gate prices in mainland China rose by 9.1 per cent last month versus 10.3 per cent in December, the statistics bureau said on Wednesday, while consumer inflation slowed to 0.9 per cent from 1.5 per cent. Both trailed analysts’ estimates, leaving more room for policymakers to stimulate the economy.

While the pandemic and energy prices remain uncertain, “inflation hasn’t constituted a constraint on the manoeuvre for policies,” said Bruce Pang, head of research and macro strategy at China Renaissance in Hong Kong.

China this week injected 100 billion yuan (US$15.7 billion) of liquidity into its financial system to support businesses, adding to recent steps in the past two months to lower borrowing costs and ease funding strain in the property sector.

Risk assets in Asia-Pacific advanced after a thawing in Ukraine stand-off as Russia pulled its troops from the border. US equities jumped overnight and crude oil futures tumbled more than 3 per cent while gold ended an eight-day rally.

“Risk appetite returned following an easing of geopolitical tensions,” said Edward Moya, an analyst at Oanda. The latest development such talks between Russia and Germany “supported market expectations that an imminent Russian invasion seems less likely.”

SMIC, China Feihe and Smoore jumped by at least 1.4 per cent, after they were tipped by analysts to join the Hang Seng Index family in the latest quarterly review. Nongfu Spring, another candidate, slipped 0.2 per cent.

Three companies rose on their trading debut. Aquatic feed maker Guangdong Yuehai Feeds Group and Cowealth Medical China surged by the 44 per cent daily cap, while China Catalyst, which makes industrial catalysts, rose 3.4 per cent on the Star Market in Shanghai.

Author: Zhang Shidong, SCMP

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