Hong Kong stocks jump on Alibaba’s record buyback plan while China Eastern slips after air crash

  • Alibaba announces expanded stock buyback programme amid a slump that has erased two-thirds of its value from record high
  • China Eastern Airlines Corp slips as much as 7.3 per cent after grounding its jets following a domestic air crash on Monday

Hong Kong stocks rose as Alibaba Group Holding led a rebound in technology companies after China’s biggest e-commerce group expanded its stock buyback plan to a record US$25 billion. China Eastern Airlines tumbled following an air crash.

The Hang Seng Index gained 1.1 per cent to near a one-week high of 21,461.33 at the local noon trading break. The Tech Index jumped 1.4 per cent, while the Shanghai Composite Index added 0.1 per cent.

Alibaba, the owner of this newspaper, surged 4.8 per cent to HK$103.90. NetEase and Meituan gained at least 1.2 per cent to HK$141 and HK$145.60 respectively. China Eastern Airlines slumped as much as 7.3 per cent after the mainland carrier grounded all of its Boeing 737-800 jets following a domestic air crash on Monday.

Local stocks appear to be holding up near a two-week high after Premier Li Keqiang on Monday said China will use policy tools to keep credit expansion at a reasonable pace and that will avoid measures that will weigh on market sentiment.

“We suggest that in the early stage of a rebound, bargain hunt for oversold technology giants, and collect leading property and infrastructure companies that benefit from growth stabilisation and financial stabilisation policies,” said Cliff Zhao, a strategist at CCB International.

Alibaba boosted the size of its buyback programme after lifting it to US$15 billion from US$1o billion in December just as the stock lost almost two-thirds of its value from an all-time high in October 2020 amid Beijing’s regulatory crackdown and US delisting concerns.

“Alibaba’s stock price does not fairly reflect the company’s value given our robust financial health and expansion plans,” said Toby Xu, Alibaba’s deputy chief financial officer.

China Eastern shed 5.8 per cent to HK$2.59 after its Beoing 737-800 jet carrying 132 passengers crashed in the southern province of Guangxi. Its Shanghai-traded stock tumbled 6.5 per cent to 5.32 yuan. Rival Air China lost 1.3 per cent to HK$5.51 and China Southern Airlines slipped 0.5 per cent to HK$4.46.

Elsewhere, traders are keeping a close watch on the earnings season as seven companies including Xiaomi Corp, WuXi Biologics and Anta Sports prepare to report on Tuesday.

Almost half of the 66 Hang Seng Index members have released their annual reports, posting an average 18.6 per cent growth rate, according to Bloomberg data. That beat analysts’ projections by 0.1 per cent, the data showed.

Hong Kong & China Gas tumbled 15 per cent to HK$9.93 after full-year earnings missed consensus estimates, and the utility scrapped a bonus share issue for the first time since 2008. JPMorgan and Daiwa downgraded their stock rating to a sell.

Markets in Asia were steady as traders digested hawkish comments by the Federal Reserve. Fed Chair Jerome Powell said the US central bank was prepared to raise interest rates by a half percentage-point at the next policy meeting if needed.

The Fed raised its target rate by 25 basis points last week in the much anticipated lift-off, and signalled six more such moves this year.

Author: Zhang Shidong, SCMP

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