Hong Kong stocks gain as tech gauge scales three-week high with mainland China funds poised to end selling

  • A rebound in Hang Seng Tech Index gains further traction even as clampdown persists and China’s data privacy law comes into force
  • Bilibili and NetEase climb by at least 7 per cent as bargain hunting sets in after a key sector valuation slips to lowest on record

Hong Kong stocks rose as investors shrugged off economic slowdown concerns to scout for bargains amid record-low valuations.

The Hang Seng Index added 0.6 per cent to 26,038.35 at the local noon break. The Hang Seng Tech Index jumped 1.8 per cent to a three-week high, as Bilibili and NetEase paced leaders with gains of at least 7 per cent. China’s Shanghai Composite Index gained 0.9 per cent.

Dip buyers have been loading up on Chinese technology stocks after months of sell-off. The 30 companies in the Hang Seng Tech Index traded at an average price-earnings of 15.1 times on August 20 after months of sell-off, according to Bloomberg data, a record low.

Mainland investors have bought HK$471 million (US$60.6 million) worth of Hong Kong stocks through the Stock Connect link so far on Wednesday, stock exchange data showed, poised to end six days of net outflows.

“It is still premature to say that the market has bottomed while policy uncertainty remains one of the largest headlines for offshore Chinese equities,” analysts led by Wang Hanfeng at China International Capital Corp wrote in a note to clients. The market has priced in much of the recent negative factors and an incremental improvement in those concerns could trigger a decent rebound, it added.

The regulatory front still remains harsh. China’s antitrust regulator on Monday issued a draft rule spelling out stiffer punishments on e-commerce platform operators for failing to protect intellectual property rights, such as selling fake or imitation goods. That followed new rules limiting the time spent by children on online games.

Government reports this week also showed China’s economic growth is fast losing its momentum as factory production and services activity moderated and trailed the consensus estimates.

Corporate results are also boosting the risk appetite. Some 55 of Hang Seng Index members have published their interim results showing an average 39 per cent jump in earnings from a year earlier, according to Bloomberg data. That exceeds analysts’ estimates by 4.2 per cent.

Ping An Insurance rose 2.9 per cent to HK$62.15 after the insurer said it was compliant on its property investments following media reports about a stock exchange inquiry. Its Shanghai-traded shares climbed 3.9 per cent to 51.86 yuan.

China Evergrande Group dropped 1.4 per cent to HK$4.30 after the world’s most indebted property developer warned of a possible default and litigations amid a liquidity crunch. Chan Hoi Wan, a key shareholder, sold 6.3 million shares on August 26 at an average price of HK$4.477 each.

Two stocks posted strong gains on their market debut. Yoantion Industrial, a maker of textile machines, surged 233 per cent from its initial public offering price to 39.57 yuan in Shenzhen. Chipmaker Macmic Science and Technology jumped 192 per cent to 80.40 yuan in Shanghai.

Author: Zhang Shidong, SCMP

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