Hong Kong stocks approach one-week high as report US is set to remove China tariffs lifts recovery hopes

  • Optimism for China recovery rose as decision could suspend levies on consumers goods including clothing while helping rein in inflation
  • A positive report on purchasing managers’ outlook also boosted sentiment

Hong Kong stocks rose to nearly a one-week high on optimism that the US will remove some of the tariffs imposed on Chinese imports and that the economic recovery in the Asian nation is gaining traction.

The Hang Seng Index advanced 0.6 per cent to 21,955.72 at the noon break. The Hang Seng Tech Index moved up 0.2 per cent, while the Shanghai Composite Index slipped 0.2 per cent.

Alibaba Group Holding gained 2.7 per cent to HK$116.30, pacing the gain on the Hang Seng Index. Wuxi Biologics jumped 8.1 per cent to HK$83.80 after Reuters reported that the biopharmaceutical company was close to being removed from a US government “unverified” list. Alibaba Health Information Technology rallied 5.8 per cent to HK$5.80, and Techtronic Industries climbed 3.1 per cent to HK$87.90.

US President Joe Biden may announce a rollback of some of the US$300 billion in tariffs on Chinese imports imposed by the Trump administration as soon as this week, Dow Jones reported. The decision could help rein in inflation, which is at a four-decade high, and ease tensions with Beijing.

The changes could include a suspension of levies on consumer goods including clothing and school supplies, as well as a way for importers to request waivers on the import taxes, the report said, citing unidentified people familiar with the matter.

A private report on the outlook of China purchasing managers also added to positive sentiment. The Caixin PMI Composite rose to 55.3 last month, the highest level since December 2020, while the PMI for the services industry climbed to 54.5, a level not seen since July last year. Readings above 50 indicate expansion, while readings below that level mean contraction. Both PMI gauges were below 50 for three consecutive months through May.

“A further gain on the market is expected,” said Hui Xiangfeng, an analyst at Yingda Securities. “China’s economy will make a significant improvement this quarter compared with the previous one because of the increased policy support. Furthermore, China’s monetary policy will continue to remain loose, an advantage over the rest of the world’s major economies that are tightening their policies.”

The Hang Seng Index has risen 19 per cent from a six-year low in March as China has contained the pandemic flare-up and rolled out measures to revitalise growth. The Hong Kong market has regained about US$600 billion in market capitalisation in that span and overtaken Japan as the world’s third largest exchange.

Tuya, a Chinese internet-of-things platform, was unchanged at HK$19.30 on the first day of trading in Hong Kong.

On the mainland, Anhui Hongyu Wuzhou Medical Manufacturer jumped 86 per cent from its initial public offering price to 48.90 yuan in its debut in Shenzhen. Another debutant, Chengdu Bright Eye Hospital, surged 59 per cent to 53.52 yuan.

Author: Zhang Shidong, SCMP

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