BYD, Meituan lead Hong Kong stock gains as Beijing rolls back Covid-19 curb while HKEX wobbles on LME lawsuit
- Stocks log early gains as China starts rolling back Covid-19 restrictions in the capital while economy attempts to rebound from lockdown losses
- Bourse operator HKEX is under pressure after metal traders seek damages related to a decision in March to cancel nickel contracts on LME
Stocks in Hong Kong and mainland China rose after Beijing rolled back some of its Covid-19 restrictions while investors turned more upbeat on the economy. Hong Kong Exchanges and Clearing came under pressure as the group faces a lawsuit from metal traders.
The Hang Seng Index climbed 1.1 per cent to 21,311.98 at the local noon trading break, its first gain in three days. The Tech Index jumped 2.4 per cent, while the Shanghai Composite Index added 1.1 per cent.
Carmaker BYD surged 5.2 per cent to HK$299.20 while short-video platform operator Kuaishou rallied 1.4 per cent to HK$81. Food-delivery platform operator Meituan surged 7.1 per cent to HK$192.90 after its first-quarter revenue beat estimates while net loss was smaller than expected at 5.7 billion yuan (US$856.8 million).
Beijing will reopen public transport service from Monday and let entertainment facilities resume business in most of its districts, the local government said. It will also allow restaurants to seat diners and companies to return workers to offices. A private Caixin report showed China’s services industry improved in May.
“China is now putting in place measures as promised to stabilise growth and the market will continue to trend up” this month, said Yang Chao, an analyst at China Galaxy Securities. “Full resumption of production is key to a sustained rebound on stocks and corporate earnings.”
Investors including Amundi, Europe’s biggest money manager, see room to become more constructive on Chinese stocks because concerns about economic growth and earnings were already baked into beaten-down stock prices.
Better news flow also aided sentiment, with the Biden administration considering lifting some import tariffs on Chinese goods to rein in inflation at a four-decade high. The Caixin PMI Services index rose to 41.4 in May from 36.2 in April, though still below the expansion threshold of 50.
Hong Kong Exchanges and Clearing added 0.6 per cent to HK$344.20, reversing an earlier drop of as much as 1.2 per cent. Its UK subsidiary that operates the London Metal Exchange faces a US$456 million claim by Elliott Associates and Elliott Internationaal over its decision in March to cancel nickel contracts.
Elsewhere, all five debutants on the mainland’s stock exchanges rallied. Sinosteel Luonai Materials Technology, which makes refractory materials, jumped 156 per cent to 12.93 yuan in Shanghai. Four others logged 44 per cent to 113 per cent gains.
Author: Zhang Shidong, SCMP