Hong Kong stocks slip from two-month high while Chinese tech firms look to rebuild rally

  • Trading remains somewhat volatile as officials strike a cautious tone with new Covid-19 cases in Shanghai and Hong Kong
  • Tech stocks attempt to build on a rally as concerns about policy backlash wane following a late Monday report on Didi Global probe

Hong Kong stocks retreated from a two-month high as retailers pared recent gains amid a rebound in Covid-19 cases in the city and in Shanghai. Tech stocks attempted to build on a rally as concerns about policy backlash waned.

The Hang Seng Index fell 0.1 per cent to 21,628.37 at the local noon trading break. The Tech Index gained 0.5 per cent to trade near the highest level since April 6 as concerns about an industry crackdown faded. The Shanghai Composite Index rose 0.5 per cent.

Anta Sports lost 1.8 per cent to HK$90.60 and water-bottling group Nongfu Spring slumped 3.1 per cent to HK$42.55, while Sunny Optical slid 4.6 per cen to HK$120.80. Gains in Alibaba Group, Tencent Holdings and JD.com kept the broader tech sector in the positive zone.

“The bottom [in Chinese stocks] is basically clear and there is no need for pessimism in strategy,” analysts at Guosheng Securities wrote in a report. Still, the rebound might not happen “in a hurry.”

Shanghai added 10 new infections, officials said on Tuesday, bringing the total to 98 since the city began a gradual reopening on June 1 after two months of citywide lockdown. Local government officials are cautious of a resurgence, requiring large manufacturers to keep operating in “safe bubbles.”

Hong Kong logged 543 new cases on Monday. The government said it’s too early to confirm the presence of the sixth wave in the city.

Traders remained wary amid reports late Monday that China was finishing a cybersecurity probe into ride-hailing group Didi Global, which helped fan an overnight rally in US-listed Chinese technology stocks.

The crackdown over the past year has created confusion and uncertainty, exposing tech companies to unquantifiable risk, one of the reasons that prompted analysts at JPMorgan Chase to describe the sector “uninvestable” before the market plunged in mid-March. Vice premier Liu He has since pledged to assure investors of policy uniformity among state agencies to help restore market confidence.

Major equity markets in Asia-Pacific were also mixed in early trading. Stock benchmarks in Japan advanced 0.6 per cent, while gauges in Australia and South Korea slipped by 1 to 1.3 per cent.

Author: Ann Cao, SCMP

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