Hong Kong stocks set for best gain in week as Alibaba jumps before earnings report, Taiwan concerns ease

On Aug 4, 2022 32

A woman walks past the Exchange Square in Central, Hong Kong with tickers showing stock prices. Photo: EPA-EFE

A rally in Alibaba Group suggests investors are banking on a better regulatory environment and industry outlook, while BYD advances on sales gain
Eyes on China’s response to Taiwan relations as military drills, more trade sanctions, sea blockades yet to come

Hong Kong stocks climbed by the most in a week as Alibaba Group Holding rallied before its quarterly earnings report and traders looked beyond the Taiwan controversy while cross-strait tensions receded.

The Hang Seng Index jumped 1.5 per cent to 20,054.46 at the local noon trading break, heading for the biggest increase since July 26. The Hang Seng Tech Index surged 2.2 per cent, while the Shanghai Composite Index added 0.2 per cent.

Alibaba Group gained 4 per cent to HKS94 while its unit Alibaba Health Information jumped 4.9 per cent to HK$4.71. JD.com advanced 4.5 per cent to HK$243.60, and Tencent Holdings appreciated 2.2 per cent to HK$309.20. Carmaker Geely Auto added 3 per cent to HK$18.10.

“With the earnings season in full swing, companies are expected to post strong results or a turnaround in the outlook,” said Ping An Securities in a report on Thursday.”It’s a good time to build positions now given the low valuations of the broader market.”

While Alibaba may say earnings fell 60 per cent in the June quarter from a year earlier, today’s gain suggests traders may have deemed the worst to be over, as sentiment improves on an easier regulatory environment and economic expansion.

Its premium over US-listed depositary shares has widened since it sought a primary listing status in Hong Kong last month, and followed that up by adding two independent directors.

Premium on Alibaba’s Hong Kong stock over US shares widens to seven times past average

China Unicom, Sands China and Li Ning are among Hang Seng Index members slated to report their interim results in the following week.

Elsehwhere, electric-vehicle maker BYD Co added 1.8 per cent to HK$293 after starting exports to Australia and reporting a more than threefold increase in sales last month, gaining advantage over other Chinese EV upstarts.

QC Solar, a maker of photovoltaic electronic equipment, jumped 299 per cent to 139 yuan in Shenzhen on its first day of trading.

A stock sell-off earlier this week, stoked by House Speaker Nancy Pelosi’s visit to Taiwan, appears to have receded as the US official left the island. China’s response, with military live-fire drills encircling the island, was not beyond investors’ expectations, analysts said.

Major markets in Asia all rose, with Japan’s Nikkei 225 gaining 0.5 per cent as the best performer in the region. That followed an overnight rally in US stocks, which were buoyed by strong data on the services sector and positive results from the likes of PayPal.

Author: Zhang Shidong, SCMP