Hong Kong stocks extend win streak as Xi’s top adviser pledges to support private companies despite crackdowns

  • Tencent, Bilibili and Kuaishou attract buying as stocks lead gainers before China releases August economic reports later this week
  • Weaker-than-expected US job report fuels optimism the Fed will not dial back its policy stimulus too soon

Hong Kong stocks rose as Chinese Vice Premier Liu He assured investors by pledging to support private businesses despite ongoing regulatory crackdowns. Bargain hunting in battered technology companies gained further traction.

The Hang Seng Index gained 0.5 per cent to 26,034.11 at the local noon break, adding to a 1.9 per cent advance last week. Social media and gaming giant Tencent Holdings led gainers in the city with a 2 per cent rally and video platform operators Bilibili and Kuaishou Technology also climbed.

China’s Shanghai Composite Index added 1 per cent and the ChiNext gauge of small-cap companies in Shenzhen surged 3.8 per cent.

Liu, seen as President Xi Jinping’s top economic adviser, said the state support for private businesses remain the same and unchanged, Xinhua News Agency reported, citing him in a video speech addressed to a digital conference in Hebei province.

Liu’s assurance added fuel to a run-up that had lifted the Hang Seng Tech Index by 14 per cent through last week from an August low. The 30 members in the index currently trade at 17.3 times price-earnings multiple, versus the historical average of 29 times, according to Bloomberg data.

“The market has fully reflected policy expectations,” said Tianfeng Securities in a report. “So the rebound would be sustainable in the short term. But volatile trading and a bumpy ride on stocks might still be in the offing going forward.”

BYD, the Chinese electric-vehicle maker backed by Warren Buffett, jumped 5.4 per cent to HK$268.20 after sales increased 86 per cent from a year earlier in August. The stock was the biggest gainer on the Hang Seng Index.

Investors are also looking ahead to a raft of key China economic data for August this week, starting with foreign trade figures on Tuesday. Meanwhile, China’s central bank has pledged to keep its policy stable and flexible in a financial stability report issued on late Friday after growth momentum eased in July.

Local stocks also got a boost after a weaker-than-estimated US job report fanned speculation the Federal Reserve will push back its plan to dial back its policy stimulus. Japan’s stocks rallied almost 2 per cent, leading Asia-Pacific markets higher on Monday, after Prime Minister Yoshihide Suga said he would resign.

Three companies surged in their mainland stock debut. Zhang Xiaoquan, a maker of household hardware products, surged 426 per cent from its initial public offering in Shenzhen. Shanghai Supezet Engineering Technology and Zhengzhou Qianweiyangchu Food jumped 120 per cent and 44 per cent respectively.

Author: Zhang Shidong, SCMP

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