Alibaba, NetEase power Hong Kong market rebound while traders weigh China policy easing signals

  • Hang Seng Index recovers for a second day from near a 21-month low as valuations appeal to investors
  • NetEase, Bilibili and Alibaba lead advance after US-listed Chinese tech stocks surged 7 per cent in overnight New York trading

Hong Kong stocks rose, extending a rebound from near a 21-month low as Chinese tech companies regained support from traders on compelling valuations.

The Hang Seng Index climbed 0.3 per cent to 23,047.22 at the local noon trading break, after surging by as much as 1.3 per cent. Today’s gains added to a 1 per cent advance on Tuesday. China’s Shanghai Composite Index was little changed.

The Hang Seng Tech Index increased 0.8 per cent, set for the best two-day advance in two weeks. NetEase, Bilibili and rallied by 1.9 per cent to 6.1 per cent. Alibaba Group Holding pared gains to 0.4 per cent, after surging by as much as 5.3 per cent earlier. The Nasdaq Golden Dragon China Index, which tracks US-listed Chinese stocks, surged 7 per cent in overnight New York trading, the most in four months.

“Hong Kong stocks have finally rebounded after heavy losses, but overall investor sentiment has not improved much,” said Stanley Chik, research director of Bright Smart Securities in a note on Wednesday. “Gains could be narrowing.”

Local stocks recovered after a 16 per cent slump in 2021 sent valuations of Hang Seng Index’s 64 members to about 11.7 times projected earnings, the cheapest after Brazil among major global markets, according to Bloomberg data.

Investors are also weighing signs of policy easing in China after the central bank lowered banks’ reserve-requirement ratio on December 15 to inject fresh liquidity into the system, while lenders this week trimmed the one-year loan prime rate for the first time since April 2020.

Elsewhere, China will strive to stabilise its economy next year and keep economic growth at a reasonable level, state-run Xinhua News Agency reported on Wednesday, citing a senior planning official.

Four firms started trading on the mainland for the first time. China Southern Power Grid Technology soared 121 per cent, while ZheJiang Yayi Metal Technology surged 138 per cent. Wuhan Kotei Informatics rose 29 per cent and Hubei Biocause Heilen Pharmaceutical jumped 41 per cent.

Major markets in Asia-Pacific were mixed. Australian stocks remain little changed, while Japanese and South Korean equities climbed at least 0.2 per cent.

Author: Cheryl Heng, SCMP

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