Hong Kong shares rebound from three-week low as bargain hunters scoop up cheap stocks amid relief measures in city’s budget
- Buyers returned after a sell-off that erased US$141 billion of market value in technology stocks since Friday
- The sell-off since Friday had reinforced fears that Beijing was readying another assault on the internet sector
Hong Kong’s benchmark stock index climbed from a three-week low, rebounding as traders scooped up beaten-down stocks amid a raft of relief measures offered by the city’s government to counter the economic effects of a resurgent Covid-19 outbreak.
The Hang Seng Index advanced 0.7 per cent to 23,682.90 at the noon trading break on Wednesday, halting a three-day losing streak. The city’s Tech Index gained 1.3 per cent, while the China Enterprises Index that tracks the performance of China-domiciled companies rose by 0.7 per cent.
“The regulatory environment has changed since last year and none of the news in the past few days has been incrementally negative from a fundamental perspective,” said Ling Vey-Sern, senior equity adviser for Asia technology at Union Bancaire Privée (UBP).
Buyers returned after a sell-off that has erased more than US$141 billion of market value in technology stocks since Friday. Stocks rebounded as the Hang Seng Index’s price-to-book ratio fell below one for a second day, according to Bloomberg data, signalling that blue-chip stocks were trading below their intrinsic asset values.
The sell-off since Friday reinforced fears that Beijing was readying another assault on the internet sector, but analysts maintain that the regulatory danger has passed.
Nine out of 64 members of the Hang Seng Index have reported earnings so far, missing analysts’ estimates by 5.5 per cent. HSBC said its fourth-quarter earnings tripled on Tuesday. Its shares rose 3 per cent. Galaxy Entertainment will report its earnings today.
Hong Kong’s government unveiled its budget on Wednesday, unleashing a raft of stimulus and relief measures to shore up the local economy as the city battens down hatches to weather through a resurgent Covid-19 outbreak that has broken daily records for three straight weeks. Measures include an anti-pandemic fund totalling HK$64 billion, with another HK$20 billion supporting residents and businesses hammered by a worsening public health crisis.
The city’s fiscal health is likely to remain in the black compared with a previous forecast of a deficit of HK$101.6 billion. A fresh round of spending coupons totalling HK$10,000 for each permanent resident will also be doled out.
Separately, global markets fell after Western nations placed new sanctions on Russia for ordering troops into separatist regions of eastern Ukraine.
Major Asian markets were mixed on Wednesday. The Japanese benchmark lost 1.7 per cent, while Australian and Korean shares gained at least 0.2 per cent. In mainland China, the Shanghai Composite Index strengthened by 0.6 per cent.
Three firms made their trading debuts on Tuesday. In Hong Kong, Lepu Biopharma Company fell 4.2 per cent when its shares began trading.
Jilin Province Xidian Pharmaceuctical Sci-Tech Development jumped 175 per cent in Shenzhen, while Shanghai Weimao Electronic rose 43 per cent in Beijing.
Author: Cheryl Heng, SCMP