Hong Kong stocks jump as Alibaba, JD.com advance after China proposes audit revision to temper US delisting risk

  • Stocks advance on the back of China’s decision to drop a key audit barrier involving US-listed Chinese stocks, tempering delisting risk
  • Markets in mainland China are closed for public holidays through Tuesday

Hong Kong stocks rose on optimism China’s proposal to remove a key audit barrier on US-listed Chinese companies will ease delisting pressure and keep a major funding avenue intact.

The Hang Seng Index climbed 1.3 per cent to 22,329.16 at 11am local time while the Tech Index jumped 3 per cent, mirroring a 4.7 per cent surge in the Nasdaq Golden Dragon Index in New York on Friday. Financial markets in mainland China are shut through Tuesday for public holidays.

Alibaba Group Holding, the owner of this newspaper, advanced 2.9 per cent to HK$112.90. Meituan rose 3 per cent to HK$160.20 and Tencent Holdings added 1.7 per cent to HK$385.40. JD.com and NetEase each gained by at least 4.4 per cent.

In a revised draft published on Saturday, the China Securities Regulatory Commission (CSRC) scrapped a requirement that only Chinese regulators can conduct on-site audit inspections of Chinese companies listed overseas. China currently denies access to US watchdog PCAOB, citing state secrets.

“This is a major concession,” said Francis Lun, chief executive of Geo Securities. “The CSRC has given in to the [US] demands. Chinese tech stocks have hit rock bottom last month and there’s no other place but to go back up.”

The Hang Seng Index has recorded losses for the past three quarters, marred by geopolitical and delisting risks before Beijing’s verbal assurance in mid-March helped put a floor on stock prices.

Today’s gain overcomes recent jitters surrounding the cost of sporadic Covid-19 lockdowns on the broader Chinese economy. This, together with a lack of policy-easing measures and stagflation worries, are among key concerns for onshore investors, according to Goldman Sach. China’s star fund managers, too, are bullish on Chinese stocks.

Elsewhere, CSPC Pharmaceutical jumped 6.7 per cent on its Monday announcement that it has gained approval to begin clinical trials of a Covid-19 vaccine based on mRNA technology.

Country Garden Holdings led a rally among developers, appreciating 7.7 per cent to HK$6.31. Country Garden Services surged 10.7 per cent while China Overseas Land and Longfor Group gained at least 5 per cent each.

Major markets in Asia rose on Monday. Shares in Australia and South Korea shares added 0.4 per cent while the Japanese stock benchmark was little changed.

Author: Cheryl Heng, SCMP

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