Alibaba, Haidilao lead Hong Kong stocks to near three-month high on China recovery signals as Beijing eases lockdown
- Hang Seng Index is headed for the highest close since April 4 with report this week suggesting a rebound in Chinese manufacturing
- Alibaba Group continues to chart higher amid speculation about Ant Group’s restructuring and IPO resumption
Hong Kong stocks approached the highest level in three months on optimism reports this week will show China’s recovery from the Covid-19 pandemic is strengthening while authorities further eased lockdown measures.
The Hang Seng Index rallied3.2 per cent to 22,403.53 at the local noon trading break, set for the highest close since April 4. The Hang Seng Tech Index surged 4.9 per cent, while the Shanghai Composite Index added 0.9 per cent.
Hotpot restaurant chain Haidilao added 8.2 per cent to HK$17.38 after Shanghai said it will resume dine-in service starting Wednesday. Macau casino concessionaire Sands China rose 8.2 per cent to HK$16.34. Alibaba Group Holding jumped 5.4 per cent to HK$120 amid speculation around Ant Group’s business.
Mainland investors have been snapping up local shares via the Stock Connect links. They spent HK$33.8 billion (US$4.3 billion) in 13 straight days through Monday, according to exchange data. Foreign investors have also returned to the onshore market, with net buying totalling 29 billion yuan (US$4.3 billion) in three days.
China’s manufacturing likely expanded in June, reversing contraction in the three preceding months, according to consensus forecasts on the Purchasing Managers’ Index tracked by Bloomberg. The statistics bureau will report on Thursday.
“The key to market sentiment now is the strength of the economic recovery and the magnitude of the stimulus measures,” said Shen Chao, a strategist at HSBC Jintrust Fund Management in Shanghai. “Looking forward to the second half, earnings, valuations and liquidity will be more friendly than the first half.”
China’s industrial profits shrank 7.5 per cen in May from a year earlier, Monday’s report showed, while revenue grew 6.8 per cent. In sequential terms, they increased at an annual pace of 2.8 per cent and 5.2 per cent from April, reflecting the easing of supply chain disruptions, according to Goldman Sachs. in manufacturing hubs.
Alibaba Group continued to scale higher. Its associat unit Ant Group hired a risk-control veteran in its new consumer lending business unit, as the company moves through a lengthy state-guided restructuring process that started after its initial public offering was abruptly called off in 2020.
Elsewhere, China is further relaxing its lockdown measures in major cities. Beijing will resume in-class teaching from Monday, while Shanghai’s Communist Party boss declared a victory in the city’s battle against the pandemic in a meeting over the weekend.
President Xi Jinping’s pledge to achieve the 5.5 per cent growth target of the year has boosted the bets that Beijing will ramp up policy support to further boost economic recovery. The government recently announced measures to boost consumption, including extending an incentive for electric-car purchases.
Shares of car producers extended a rally from last week. Geely Auto added 4.2 per cent to HK$18.70 while XPeng added 2.2 per cent to HK$139.30. BYD Co jumped 2.3 per cent to HK$317.40.
Gains in US equities last week also boosted sentiment, with the S&P 500 logging the biggest gain in two years on Friday. Federal Reserve officials signalled that the US central bank will consider the probability of a recession while moving to rein in inflation.
Author: Zhang Shidong, SCMP