Macau casino stocks keep Hong Kong market on longest winning run in five weeks as trading volume sags before holiday

  • Results from a public hearing in Macau point were in favour of keeping the existing casino operations, according to reports from brokers
  • Biden signs into law a measure to ban all imports from Xinjiang for alleged forced labour, building on recent actions including sanctions on officials

Hong Kong stocks rose for a fourth day, pushing the benchmark index to its longest winning streak in five weeks. Macau’s casino operators rallied on optimism their gambling concessions will be extended next year.

The Hang Seng Index rose 0.2 per cent to 23,236.17 at the close of trading on Friday, adding to the best momentum since a six-day rally in mid-November. The Hang Seng Tech Index declined 0.3 per cent, while China’s Shanghai Composite Index lost 0.4 per cent.

Sands China jumped 5.2 per cent, Galaxy Entertainment added 2.1 per cent and MGM China surged 8.1 per cent. Most participants at a public hearing in the world’s biggest gambling hub suggested keeping the current six licences, according to reports from investment banks including Sanford C. Bernstein.

That injected confidence among investors that the six existing operators will be able to renew their concessions when they expire in June next year. Casino stocks had earlier slumped amid a regulatory overhaul as China seeks to diversify Macau’s economy from its reliant on gambling revenue.

Trading in Hong Kong’s equity market ended at noon ahead of the festive season, with will shut on December 27 for a public holiday. The daily trading volume today was 61 per cent below the 30-day average, according to Bloomberg data.

Elsewhere, heightened US-China tensions limited stock gains. President Joe Biden signed into law a measure that will effectively ban all imports from Xinjiang for alleged forced labour. Xinjiang, mostly populated by the Uygur ethnic minority, is a major cotton-producing region as well as polysilicon used in solar panels.

Xinyi Glass sank 2.1 per cent and Xinyi Solar slipped 0.5 per cent.

“We expect Hong Kong stocks to bottom out in the following month,” said Cliff Zhao, a strategist at CCB International in Hong Kong. “Investors should build up positions on stocks with attractive valuations and high dividend yields, such as utilities, banks and infrastructure.”

Despite this week’s rebound, the Hang Seng Index remained 15 per cent weaker this year, making it the worst-performing major benchmark globally. Members of the index trade at 11.9 times projected earnings, the cheapest after Brazil, Bloomberg data showed.

Four companies all rose as they began trading for the first time on mainland bourses. Chip maker Focuslight Technologies jumped 150 per cent in Shanghai while chemical producer Jiujiang Shanshui Technology rose by 40 per cent in Shenzhen.

Other major markets in Asia-Pacific all rose, tracking overnight record rally in US stocks on optimism the global economy can overcome new threats from the Omicron virus strain.

Author: Zhang Shidong, SCMP

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