Hong Kong stocks rally as Alibaba Health, Kuaishou push tech benchmark to best run in a month
- Tech benchmark has risen by about 5 per cent in a three-day rally as investors pick up values in market trading near an all-time low
- China Life Insurance tumbles as chairman is investigated by China’s ant-corruption agency, while Modern Land slumps on trading resumption following debt defaults
Hong Kong stocks advanced for a third day, as Chinese tech companies rallied in the best winning run in a month on valuations appeal. China Life Insurance and developer Modern Land slumped amid internal financial crises.
The Hang Seng Index rose 0.8 per cent to 23,687.10 at the local midday trading break. The Tech Index jumped 2 per cent while China’s Shanghai Composite Index gained 0.3 per cent.
Alibaba Health Information surged 12 per cent while Kuaishou Technology rallied 9.7 per cent. Tencent and Meituan added more than 0.9 per cent while Bilibili gained 4.1 per cent, among the biggest winners as tech stocks accumulated about5 per cent gain over three days from an all-time low set on January 5.
“Last year’s popular sectors suffered major corrections in the first week of the new year,” Ping An Securities (HK) said in a note on Monday. “But as markets bottom, they present opportunities for investors, given that the Chinese authorities have highlighted they would prioritise economic stability going forward.”
The market slump since the end of last year has created buying opportunities as stocks cheapened. Hang Seng Index’s members have been trading below their average book value for 21 straight days. The tech gauge’s price-to-book ratio of 1.36 times is near its record low of 1.29 times set on December 29.
A late rally in tech stocks lifted the Hang Seng Index to a 0.4 per cent gain last week. That made it a sixth consecutive year in which the benchmark had a winning opening week to a new year.
Elsewhere, China Life Insurance tumbled 1.8 per cent. Its chairman Wang Bin was placed under disciplinary and supervisory investigation, the company said in an exchange filing on Sunday.
Modern Land slumped 39 per cent as the stock resumed trading after a three-month halt following several defaults on its offshore debt. The developer said it owed bondholders almost US$1.4 billion and faced legal actions for recovery of payments.
Major Asian markets retreated on Monday amid overriding concerns about Covid-19 spread and higher borrowing costs. South Korean equities lost 0.9 per cent, the Australian gauge slipped 0.1 per cent while the Japanese benchmark was little changed.
Author: Cheryl Heng, SCMP