Hong Kong stocks gain as Meituan, WH Group advance while Premier Li calls for policies to support growth
- Premier Li Keqiang calls on key provinces to undertake more growth-friendly policies after recent signs of economic wobble
- Meituan recoups part of Tuesday’s 9.1 per cent slump while focus is on Tencent, HKEX before their earnings reports
Hong Kong stocks rose for the first time this week after Premier Li Keqiang urged officials in key provinces to undertake growth-boosting policies following reports signalling a pullback in economic activity. Meituan rebounded from a sell-off.
The Hang Seng Index added 0.8 per cent to 19,997.79 at the local noon trading break. It slumped 1.1 per cent a day earlier. The Hang Seng Tech Index advanced 1 per cent, while the Shanghai Composite Index added 0.3 per cent.
Meituan surged 4.6 per cent to HK$172.10. Pork-processing firm WH Group climbed 1.8 per cent to HK$5.53 while power tools maker Techtronic and developer Country Garden gained more than 2 per cent to HK$101.30 and HK$2.60 each. Alibaba Group Holding advanced 0.9 per cent to HK$90.80.
Li’s call, while visiting the southern technology hub of Shenzhen, echoed local media reports suggesting more incentives were needed to lift the economy. Official reports this week showing factory output and retail sales grew at a slower pace in July, missing consensus forecasts.
“Investors are overly pessimistic about Chinese stocks, which means there is the potential for positive surprise,” Kristina Hooper, a strategist at Invesco, said in a note on Wednesday. “The economic rebound will continue this year, and I still expect Chinese equities to claw back some of the losses from the first half, given the potential for policy support – both fiscal and monetary – if and when needed.”
Meituan, in which Tencent has a 19.3 per cent stake, recouped part of the 9.1 per cent plunge on Tuesday. The rout was in reaction to a Reuters report that Tencent was considering selling part or all of its Meituan shares this year.
Trading in other Tencent investee companies was mixed. Kuaishou Technology rose 1 per cent to HK$72.60 while China Literature slipped 0.3 per cent to HK$29.50 and JD.com added 1.4 per cent to HK$224.20. Bilibili added 0.4 per cent to HK$192.40.
Corporate earnings are back in focus as several index heavyweights report. Tencent slipped 0.1 per cent to HK$302.80 as earnings probably crashed 41 per cent from a year earlier in the second quarter based on the international accounting standard, according to analysts tracked by Bloomberg.
Hong Kong Exchanges & Clearing fell 0.4 per cent to HK$345.40. First-half profit for the city’s bourse operator may have fallen 22 per cent to HK$5.15 billion (US$657 million) amid a dearth of jumbo stock offerings, according to Bloomberg data.
Wind power generator China Longyuan Power Group surged 8 per cent to HK$13.50 and China Power International Development rallied 7.5 per cent to HK$4.47 after China’s two state-owned power grid companies announced to set up two separate units to tackle the issue of unpaid subsidies to green-energy companies.
Elsewhere, two debutants both rose on the mainland’s exchanges. Shenzhen Newway Photomask Making, a maker of optoelectronic products, jumped 88 per cent to 47.04 yuan in Shanghai, while biometric device producer Zkteco rallied 32 per cent to 57.03 yuan in Shenzhen.
Other major markets in Asia were mixed. Japan’s Nikkei 225 rose 0.9 per cent and South Korea’s Kospi slipped 0.6 per cent. Benchmark stock gauges in Taiwan and Australia were little changed.
Author: Zhang Shidong, SCMP