Hong Kong stocks reach 3-week high on Xiaomi earnings, buyback surprise while ZTE surges after US court ends trade probation

  • Xiaomi reports better-than-expected earnings as smartphone maker joins Alibaba Group in unveiling a stock buyback plan to shore up confidence
  • Chinese telcos enjoy a marginal bump after a US court ends ZTE’s five-year probation from a 2017 case involving sale of equipment to sanctioned states

Hong Kong stocks rose to near a three-week high as companies from Xiaomi Corp to WuXi Biologics reported better-than-expected earnings. Alibaba Group extended gains on its record buyback plan while ZTE surged after a US court ended its trade probation.

The Hang Seng Index advanced 1.7 per cent to 22,251.15 as of 2.15pm local time, set for the highest close since March 3. The Tech Index surged 2.8 per cent while the Shanghai Composite Index added 0.3 per cent.

Xiaomi jumped 5.5 per cent to HK$14.98 after fourth-quarter sales and earnings beat analysts’ projections, and the smartphone maker unveiled a HK$10 billion (US$1.28 billion) stock buyback programme. WuXi Biologics surged 12 per cent to HK$65.30, also affer an earnings surprise.

Chinese technology stocks built on a 3.2 per cent rally on Tuesday. Alibaba gained 7.1 per cent to HK$118, adding to an 11 per cent rebound after the e-commerce group topped up its buyback programme to a record US$25 billion. Tencent added 1.9 per cent to HK$395.40 before its earnings report later Wednesday.

Sentiment was also aided by mainland Chinese media reports, which said the central bank still had room to free up more cash in the system by cutting the reserve-requirement ratio and ease borrowing costs in the first half to prop up growth.

Tencent advanced on speculation the WeChat operator will also boost its buyback plan, even as fourth-quarter earnings are projected to shrink 47 per cent from a year earlier, according to analysts tracked by Bloomberg. Geely Automobile, Haidilao and China Mobile are other key Hang Seng Index members to also report later today.

China Eastern Airlines recovered 1.5 per cent to HK$2.72 as the carrier investigates the cause of a domestic air crash on Monday in southern Guangxi province. The stock lost as much as 7.3 per cent on Tuesday after grounding its Boeing 737-800s and cancelled many flights.

ZTE Corp surged 28 per cent to HK$19.90, liftting some Chinese telecommunication stocks. A US court ended gear maker ZTE’s five-year probation arising from its guilty plea in 2017 for breaking US trade sanctions on Iran and North Korea. China Telecom and China Mobile rose by at least 0.9 per cent.

Other major markets in Asia advanced, taking cues from an overnight rally in US equities after the S&P 500 and the Nasdaq Composite jumped more than 1 per cent as traders embraced higher interest rates and government bonds sold off.

Hangzhou Heshun Technology, which makes film products fell 7 per cent to 52.37 yuan in its Shenzhen debut. Another debutant Shouyao Holdings, a Beijing-based drug maker, slumped 17 per cent to 33.23 yuan in Shanghai.

Author: Zhang Shidong, SCMP

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