Alibaba, XPeng drive Hong Kong stocks to two-week high on China recovery outlook, Xi pledge

  • The Hang Seng Index is headed for the highest close since June 10, having gained 2.4 per cent so far this week
  • Alibaba Group, XPeng and Geely Auto led the pack Friday morning, rising at least 5 per cent

Hong Kong stocks rose to a two-week high as sentiment continued to improve amid a brighter outlook for China‘s economic recovery. Positive signals from Beijing this week helped fuel gains in tech and auto stocks.

The Hang Seng Index advanced 1.5 per cent to 21,583.03 at the noon break on Friday, heading for the highest close since June 10. The benchmark has gained 2.4 per cent this week. The Hang Seng Tech Index climbed 3 per cent, while the Shanghai Composite Index added 0.4 per cent.

Geely Automobile and Wuxi Biologics were the biggest gainers on the benchmark, rising more than 7 per cent. Alibaba Group surged 5.5 per cent to HK$113.90 to, while electric-car maker XPeng jumped 9.2 per cent to HK$138.70.

The stock rebound has been strengthening on mounting optimism about China’s recovery from the impact of Covid-19 lockdowns. President Xi Jinping pledged this week that the nation will strive to achieve 5.5 per cent growth this year, fuelling bets that policymakers will take more action to spur growth.

Premier Li Keqiang said in a cabinet meeting this week that China will extend a tax exemption on purchases of electric cars to boost consumption, while more cities including Zhengzhou and Wenzhou have eased curbs on home purchases.

“Even after the rebound, Hong Kong stocks are still attractive investments as the valuations are still low relative to the historical average,” said Tao Yifei, a fund manager at HFT Investment Management in Shanghai. “With the easing of the pandemic, the government is now shifting the focus to the task of bolstering growth again and China is now back to the track of having the economy as the priority.”

EV maker Nio gained 2.6 per cent to HK$189, reversing an earlier drop of 3.2 per cent. Two people were killed in an accident at the electric-car maker’s headquarters during a test drive on Wednesday, company officials said.

GogoX Holdings, a Hong Kong-based logistic company, added 4.2 per cent to HK$22.40 on the first day of trading. It was the first company to have a listing ceremony after a two-year hiatus because of the pandemic.

Sands China rallied 2.7 per cent to HK$15.02 and Galaxy Entertainment climbed 2.5 per cent to HK$41.75 after Macau extended their gaming concession to the end of December.

An uptick in other markets in Asia also lifted sentiment, and yields in US Treasuries fell because of a disappointing jobless claim report, boosting the appeal of stocks.

Author: Zhang Shidong, SCMP

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