Hong Kong stocks pare losses in week as Macau casinos, tech firms rebound from sell-off

  • Alibaba Health surges following a buy rating call by Goldman Sachs, while Country Garden Holdings advances
  • Buyers return to oversold Macau casino concessionaires despite growing regulatory uncertainty

Hong Kong stocks halted a four-day slump as Chinese tech stocks and Macau casino operators rebounded from a sell-off. China Evergrande tumbled amid debt restructuring worries.

The Hang Seng Index advanced 0.4 per cent to 24,765.45 at the local noon break on Friday after sliding to a 10-month low on Thursday. The Hang Seng Tech Index climbed 2.9 per cent. China’s Shanghai Composite Index dropped 0.6 per cent before a two-day public holiday next week.

A gauge of Macau casino stocks trading in Hong Kong added 0.2 per cent after a technical indicator known as the relative strength index signalled the slump this week was overdone. Galaxy Entertainment led the advance with more than 1 per cent gain. Alibaba Health Information Technology surged 6.3 per cent after Goldman Sachs initiated the coverage with a buy rating.

Still, the Hang Seng Index has lost 5.5 per cent for the week, the biggest pullback in a month. Weak August reports on China’s economy, uncertainty surrounding Macau casino regulations, and a debt crisis at China Evergrande Group have combined to spook investors.

“Coming after the carnage in gaming stocks this week after the latest Government investigation targeted Macau’s casinos, China markets don’t have a lot to cheer about,” said Jeffrey Halley, an analyst at Oanda. “It seems that only the large state-owned enterprises remain safe, hence their recent outperformance.”

Casino operators in Macau regained some footing. Galaxy Entertainment rose 1.7 per cent to HK$39.75 and MGM China added 0.5 per cent to HK$5.66. Sands China, however, slipped 2.1 per cent to HK$15.18. The concessionaires crashed this week amid concerns about tighter regulations.

China Evergrande tumbled 12 per cent to a decade low of HK$2.32, bringing losses this week to 36 per cent, as the troubled Shenzhen-based developer looks for solutions to unwind more than US$300 billion of liabilities.

On the mainland, Neway CNC Equipment, a maker of numerically-controlled machine tools, jumped 211 per cent from the initial public offering price to 23.48 yuan in Shanghai. Another debutant Shanghai Geoharbour Construction, which provides geotechnical engineering services, climbed 44 per cent.

Author: Zhang Shidong, SCMP

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