Hong Kong stocks overturn losses as investors see values in Chinese tech leaders, shrug off Shanghai lockdown measures
- Shanghai authorities on late Sunday ordered a four-day lockdown from Monday in the Pudong New Area, home to about 5.7 million people to contain an outbreak
- Measures are set to disrupt operations at container port, international airport, Tesla’s Gigafactory and facilities owned by chip maker SMIC, among others
Hong Kong stocks advanced as investors scooped several industry leaders on valuation appeal after a sell-off this month, overturning earlier losses triggered by concerns about a Covid-19 lockdown around Shanghai.
The Hang Seng Index advanced 1.3 per cent to 21,683.35 as of noon trading break, while the Tech Index gained 3.1 per cent. Meanwhile, the CSI 300 Index slid 0.8 per cent, adding to a 2.2 per cent loss last week, while the Shanghai Composite Index lost as much as 1 per cent.
Meituan jumped 14.4 per cent to HK$154.40 as its fourth-quarter revenue beat expectations and sequentially losses narrowed. Alibaba Group Holding, the owner of this newspaper, and Tencent each gained more than 3 per cent. Oil producers advanced, with Sinopec and CNOOC rising at least 4.9 per cent.
The lockdown is “highly likely to disrupt the city’s commercial activity,” said Bruce Pang, head of research and macro strategy at China Renaissance Securities. “In the long run, we expect China to continue to make its Covid-19 response more scientific and targeted, leading to a more softened policy stance, flexible measures and gradually looser restrictions.”
Chinese stocks are “still on sale,” according to analysts at Goldman Sachs. While the coast is not entirely clear, “the low has been seen,” they added in a March 27 report to clients. Before today, the Hang Seng Index’s 66 members traded at a record 13 per cent discount to book value, according to Bloomberg data.
Stocks earlier fell in reaction to Shanghai’s announcement late Sunday, ordering a four-day lockdown in Pudong New Area, a district of 5.7 million people, to conduct more tests and contain an outbreak. It was set to disrupt port and airport operations, as well as facilities at Tesla and chip maker SMIC.
SMIC gained 1.9 per cent to HK$17.12, reversing a 1.7 per cent slide. The stock fell 0.6 per cent in Shanghai to 46.46 yuan.
The Shanghai Composite Index has lost about 12 per cent of its value this year, making it the worst performer among major Asia-Pacific equity benchmarks. The benchmark had earlier plunged to close to a two-year low as factors including geopolitical risks surrounding Ukraine, delisting fears and Covid-19 outbreaks soured sentiment.
On the mainland, Mega-info Media Company sank 13 per cent on its first day of trading in Shenzhen. Major Asian markets were mixed on Monday. Japanese shares fell 0.4 per cent while Australian equities gained 0.2 per cent and South Korean stocks added 0.1 per cent.
Author: Cheryl Heng, SCMP