Hong Kong stocks trim losses, Alibaba rebounds as China inflation report spurs bets for more monetary easing

• Stocks trim losses triggered by a slide in tech firms after China, Ant Group deny report about IPO revival
• Chinese carmaker Nio, video-platform operator Bilibili slip after latest quarterly report cards disappoint analysts

Hong Kong stocks pared losses after a government report showed benign inflation in mainland China last month, boosting hopes for further monetary policy easing. Tech stocks also rebounded from a knee jerk sell-off.

The Hang Seng Index slipped 0.2 per cent to 21,828.86 at the local noon trading break, trimming a loss of as much as 1.7 per cent. The Tech Index swung between gains and losses before trading 0.9 per cent higher. The Shanghai Composite Index gained 0.6 per cent.

Alibaba Group Holding advanced 1.7 per cent to HK$113.20 after losing as much as 3.9 per cent. Meituan added 1.4 per cent to HK$204.60 while Li Ning added 3.6 per cent to HK$65.45. Gains in tech sector were limited by losses in Bilibili, which sank 9.8 per cent to HK$210.40 after its first-quarter earnings on Thursday disappointed market analysts, prompting Credit Suisse and Goldman Sachs to lower their price targets.

“The rebound for tech stocks in the short term has ended, it should take some time to wait for another catalyst such as [stronger] economic activity,” said Kevin Li, portfolio manager at GF Asset Management (Hong Kong). “The market is quite volatile. Visibility for the long term is not that good.”

China’s factory-gate prices rose at a slower pace in May, gaining 6.4 per cent from a year earlier, the statistics bureau said on Friday, versus an 8 per cent rise in April Consumer prices rose by 2.1 per cent, unchanged from April and lower than the 2.2 per cent consensus.

“China’s slack inflation data for May underline weakness in the economy and add to the case for the People’s Bank of China to increase stimulus further,” said David Qu at Bloomberg Economics. “An extended slowdown in factory-gate inflation widens the opening for the PBOC to ease.”

Stocks wobbled in early trading after China’s securities regulator said it “has not conducted any assessment or research in this regard,” denying reports it was evaluating plans to revive Ant Group’s stock offering. The fintech giant also separately rejected the reports.

Investors remained guarded after the Shanghai government ordered mass testing in eight of the 16 districts in the financial hub to screen for outbreak. The local authorities ended a citywide lockdown on June 1.

Elsewhere, electric car maker Nio retreated 0.8 per cent to HK$158.40. Its expected deliveries of 23,000 to 25,000 for the June quarter trailed estimates of 28,220 units while the expected revenue of 9.34 billion yuan to 10.09 billion yuan came short against 11.55 billion yuan consensus.

Hong Kong’s second SPAC or blank-cheque offering kicked off its trading debut on Friday. Vision Deal HK Acquisition Corp opened at HK$10 and remained unchanged. Separately, Yoho Group, an electronics and home appliances retailer, slipped 0.5 per cent to HK$2.09 on its first day of trading.

Author: Cheryl Heng, SCMP