Hang Seng Index stages a pre-lunch rebound as bargain hunters swoop in on oversold internet stocks, ignoring Li Ning’s slump

  • The Hang Seng Index fell 23.93 points, or by less than 0.1 per cent, to 25,604.81 at the lunch trading pause, recovering from its three-week low earlier in the day
  • In mainland China, the benchmark indexes on the Shanghai and Shenzhen exchanges fell ahead of the lunch pause

Hong Kong’s benchmark stock index recovered some of its losses before a lunch break, as bargain hunters swooped in on companies related to the internet and technology industries, ignoring the slump in one of China’s largest athletic wear producers.

The Hang Seng Index fell 23.93 points, or by less than 0.1 per cent, to 25,604.81 at the lunch trading pause, recovering from its three-week low earlier in the day. The China Enterprises Index, which tracks 50 China-domiciled companies, fell 32.67 points to 9,061.13.

Declines were led by HSBC, the largest of Hong Kong’s three currency issuing banks, which fell 1.7 per cent to HK$47.05. Shares of the bank, which traces its roots to Hong Kong and Shanghai during the British colonial era, fell for the first time in seven days after it announced a plan to buy back US$2 billion in shares.

Li Ning Company Limited, the eponymous athletic wear company founded by China’s best-known Olympic gymnast, plunged by as much as 8.1 per cent to an intraday low of HK$87.50 after unveiling a plan to raise HK$10.4 billion (US$1.35 billion) by placing out 120 million new shares, before pausing for lunch at HK$88.40.

Investors’ confidence in China’s technology and internet-related industries improved, pushing the tech index to rebound a day earlier from its biggest loss since September 9.

Gains were led by Meituan, China’s dominant food delivery and restaurant review platform, which jumped by as much as 3.2 per cent to an intraday high of HK$77.20 before settling at HK$272.80 at the lunch pause.

Alibaba Group Holding, the world’s largest online shopping platform and the owner of this newspaper, advanced by as much as HK$4.60, or 2.8 per cent, to an intraday high of HK$169.10 before pausing at HK$166.80. Tencent Holdings, the world’s largest games publisher by sales, rose by as much as 1.4 per cent to an intraday high of HK$494 before halting for break at HK$490. Gains in Meituan and Alibaba propelled the Hang Seng Tech Index by 0.3 per cent.

Li Ning, the former Olympic gymnast and founder of his namesake athletic wear company, during the 2016 interim results press conference in Wan Chai on August 2016. Photo: Sam Tsang.

 

In mainland China, the benchmark indexes on the Shanghai and Shenzhen exchanges fell ahead of the lunch pause. Shanghai’s Composite Index fell 33.31 points, or by 0.9 per cent, to 3,529 while Shenzhen’s benchmark fell 18.27 points, or by 0.8 per cent, to 2,379.23.

Two stocks made their trading debuts in Shanghai and Shenzhen today. Liaoning Chengda Biotechnology, which develops and manufactures vaccines, fell 18 per cent when its stock began transacting at 89.99 yuan on Shanghai’s Star Market, compared with its initial public offering (IPO) price of 110 yuan. The stock fell by 24 per cent to 83.32 yuan at the lunch trading break.

Rumere, an apparel manufacturer and distributor, fell 9.5 per cent to 30 yuan when it began trading in Shenzhen, compared with its IPO price of 33.16 yuan. The stock declined to 30.10 yuan at the lunch break.

Investors continued to monitor third-quarter earnings from some of China’s biggest publicly traded companies.

China Petroleum & Chemical Corporation, or Sinopec, fell 1.6 per cent in Hong Kong to HK$3.73, retracing 3.9 per cent to 4.18 yuan in Shanghai. China’s largest oil refiner said its interim pre-tax profit fell by a third to 721 million yuan (HK$876 million).

Major markets in Asia were mostly in the red, with benchmark indexes declining from Japan to Australia. South Korea’s Kospi index was the sole gainer, rising 0.2 per cent in recent trading.

Author: Cheryl Heng, SCMP

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