Alibaba, Meituan, CNOOC supercharge Hong Kong stocks as policy easing hopes swell amid Chinese manufacturing slump

  • The Hang Seng Index surges 2 per cent, paring the monthly loss to 6 per cent, amid signs China’s manufacturing slump is deepening
  • The Shanghai Composite Index, Asia’s worst performer, is facing the biggest sell-off since 2016

Hong Kong stocks rallied by the most in a month, paring losses in April, as China policy easing bets swell before a government report indicating a slump in manufacturing. CNOOC jumped on a special dividend payout plan.

The Hang Seng Index surged 2 per cent to 20,686.30 at the local noon trading break, narrowing the loss in April to 6 per cent. The Tech Index soared almost 6 per cent, aided by more than 7 per cent gains in Alibaba Group Holding and Meituan. CNOOC advanced more than 3 per cent.

The Shanghai Composite Index added 0.4 per cent after China’s clearing house halved stock transaction costs to help spur trading and market confidence. The gauge has slumped 8.2 per cent for the month, set for the biggest sell-off since 2016.

Signs of slowdown have fanned concerns China will fall behind the curve in reflating the economy, prompting bets the Communist Party’s Politburo meeting this month will take stronger pro-growth measures. Investors have been disappointed as the central bank offered a token move to cut banks’ reserve requirement ratio.

The April Politburo “will likely deliver a positive signal of stabilising growth,” said Zheng Xiaoxia, an analyst at Hua An Securities. “With the easing of the headwinds in the short term, the market is due for a sharp rebound from being oversold.”

The Politburo, the party’s highest decision-making body, holds its monthly meeting this week, typically to review quarterly performance and targets. Some economists have called for more stimulus to check a slump in output and confidence.

An index tracking manufacturing in mainland China fell to 47.3 this month, the lowest since the peak of Covid-19 outbreak in Wuhan epicentre in February 2020, according to economists’ consensus tracked by Bloomberg. The statistics bureau will report the Purchasing Managers’ Index on Saturday. A reading below 50 indicates contraction.

Stocks were also lifted as new Covid-19 cases in Shanghai’s low-risk unguarded zones fell to the lowest since a phased lockdown was imposed one month ago. That suggests the outbreak may come under control in the coming days, easing supply-chain disruptions.

Alibaba Group surged 9.4 per cent to HK$96.50, Meituan gained 7.9 per cent to HK$160.70 and added 7.1 per cent to HK$246. CNOOC rallied 3.5 per cent to HK$11.22 after proposing to pay shareholders almost HK$56 billion (US$7.1 billion) in special dividends. Its Shanghai-traded stock added 5.7 per cent to a record 16.34 yuan.

Trading in Hong Kong shrank, with volume almost a quarter below the 30-day average for this time of the day. The city’s market will be shut on Monday for Labour Day, while the mainland bourses will close next week through Wednesday.

Dowell Service Group, a China-based property management company, slipped 0.2 per cent to HK$11.88 on the first day of trading in Hong Kong.

Author: Zhang Shidong, SCMP

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