Alibaba leads tentative market rebound as Taiwan, cross-strait tensions keep stock investors on edge
- Stocks in Hong Kong and mainland China attempt to recover from Tuesday’s sell-off sparked by cross-strait tensions over Pelosi’s visit to Taiwan
- Alibaba leads gainers with market showing tentative optimism while China plans live-fire drills in response
Stocks in Hong Kong and mainland China recovered from a sell-off even as cross-strait tensions remain elevated over the Taiwan situation, with investors keeping risk appetite in check for potential military escalation.
The Hang Seng Index rose 0.6 per cent to 19,809.55 at the noon break, paring an earlier advance of as much as 1.2 per cent. The benchmark fell 2.4 per cent on Tuesday. The Hang Seng Tech Index jumped 2.3 per cent while the Shanghai Composite Index added 0.4 per cent.
The Taiex lost 0.1 per cent in Taipei, on top of a 1.6 per cent decline a day earlier. Companies with business exposure to the mainland bore the brunt of selling, with Hon Hai Precision Industry and President Chain Store falling more than 2 per cent.
Alibaba Group Holding jumped 3.9 per cent to HK$90.45, leading winners in Hong Kong. The e-commerce group is due to issue its quarterly earnings on Thursday, with consensus pointing to a 60 per cent slump from a year earlier based on the US accounting standard.
“The real show of force by China is still to come,” Clifford Bennett, chief economist at ACY Securities, said in a note to clients. “This is not a point on the Taiwan situation overall, simply to state that it places additional pressure on the military of all three nations and will most definitely set back US-China relations for many years.”
Other Chinese tech peers also rebounded, as Tencent Holdings gained 2.6 per cent to HK$302.80 and JD.com added 2.7 per cent to HK$234.40. Chip maker Semiconductor Manufacturing International Corp rallied 8.6 per cent to HK$16.88. HSBC weakened for a second day, losing 0.2 per cent to HK$50.90.
US House Speaker Nancy Pelosi met local lawmakers and President Tsai Ing-wen on Wednesday after landing in Taipei overnight, defying stern warnings from Beijing. In response, China will hold live-fire drills on Thursday in six zones encircling Taiwan, which Beijing deemed as a renegade province.
Elsewhere, China’s services activity grew in July as authorities further eased Covid-19 curbs, helping restore consumer confidence. The Caixin PMI Services Index rose to 55.5 in July from 54.5 in June. The Caixin China Composite PMI Index of smaller enterprises was at 54 last month, remaining in expansionary territory for a second straight month.
Markets in the Asia-Pacific region were mixed. Benchmarks in Japan and South Korea added 0.5 per cent while Australian equities slipped 0.5 per cent. US stocks declined overnight on China tensions and worries about the Federal Reserve’s policy tightening path.
Author: Zhang Shidong, SCMP