Hong Kong stocks head for longest winning streak in three weeks on China recovery optimism, as property and casino stocks rally

On Jun 21, 2022 50

Vehicles travel through Pudong’s Lujiazui Financial District in Shanghai on June 20, 2022. A weekend Covid-testing blitz found the virus seemingly contained, helping stoke optimism for the economy. Photo: Bloomberg

China Resources Land, Country Garden and other property companies gained as more cities signalled supportive policy changes
Casino stocks recovered on expectations that yesterday’s sell-off due to Covid-19 infections was excessive

Hong Kong stocks rose for a third day, heading for the longest winning streak in three weeks as optimism mounted that China’s recovery from the chilling effects of lengthy and disruptive Covid-19 lockdowns is building momentum.

The Hang Seng Index gained 1.4 per cent to 21,466.03 at the noon break. The Hang Seng Tech Index advanced 1.5 per cent, while the Shanghai Composite Index of onshore stocks added 0.2 per cent.

Chinese property developers including China Resources Land and Country Garden Holdings rallied for a second day after more cities rolled out supportive policies to bail out the property market and bolster growth. Meanwhile, CLP Holdings tumbled almost 6 per cent after revealing it expects a record loss for the first half of the year.

The Hang Seng Index is extending a 15 per cent rebound from a six-year low in March after Covid-19 new infections in Beijing and Shanghai eased and key economic indicators for May improved. Investors have been expecting that Beijing’s top policymakers will take more action to boost growth, including further relaxation of restrictions on home purchases and reductions in the reserve-requirement ratio and benchmark borrowing costs.

“The rebound on Hong Kong stocks can last for a while,” said Wang Yi, an analyst at Great Wall Securities. “The pro-growth measures are now working and more are on the way. The internet sector is pivotal to stabilising growth and employment, and there will be more positive policy signals on the sector going forward.”

Country Garden gained 2 per cent to HK$4.71 and China Resources Land added 1.9 per cent to HK$34.80. Country Garden Services jumped 5 per cent to HK$33.80.

Macau’s casino operators rebounded from the turmoil on Monday on expectations that the sell-off, after Macau reported new Covid-19 infections for the first time in eight months, was excessive. Sands China rose 2.1 per cent to HK$14.88, recouping a 2.2 per cent loss on Monday. Galaxy Entertainment advanced 2.6 per cent to HK$41.45 after falling 1 per cent on Monday.

Tencent Holdings added 2.1 per cent to HK$378.40 after it reduced a stake in education technology firm Koolearn Technology Holding to 1.6 per cent from 9 per cent. Koolearn, whose parent is New Oriental Education and Technology Group, lost 0.5 per cent to HK$16.90 after a seven-fold upsurge over the past week spurred by its foray into live-streaming e-commerce.

Alibaba Group Holding, owner of the Post, added 0.5 per cent to HK$104.90, and Meituan slipped 0.1 per cent to HK$199.20.

Author: Zhang Shidong, SCMP