Meituan, Tencent lift Hong Kong stocks from two-month low, stopping a four-day slide

  • Hang Seng Tech Index posts its strongest gain in a week, rising 4.6 per cent at the noon break
  • Consumer inflation in China showed prices rose 2.1 per cent in May from 1.5 per cent a month earlier

Hong Kong stocks rose from a two-month low as higher-than-expected inflation in April strengthened bets for further policy support to soothe the economic strain caused by strict lockdown measures on the mainland. Falling coronavirus cases in Shanghai also boosted sentiment.

The Hang Seng Index gained 1.7 per cent at noon trading break, halting a 7.1 per cent slide over the past four trading sessions. The Tech Index added 4.6 per cent, its strongest gain in a week, while the Shanghai Composite Index rose 1.6 per cent.

Meituan soared 8.2 per cent to HK$164.20, while Tencent Holdings strengthened 4.4 per cent to HK$356.20. Alibaba Group Holding added 1.1 per cent to HK$86.95 and gained 3.2 per cent to HK$214.60.

Factory-gate prices in mainland China rose by 8 per cent last month, faster than a projected 7.7 per cent by analysts in a Bloomberg survey. Producer prices had increased 8.3 per cent in March. The statistics bureau’s consumer inflation data on Wednesday showed that prices accelerated to 2.1 per cent from 1.5 per cent, exceeding analysts’ estimates.

“The moderating producer prices and benign consumer price inflation open a wider path for the People’s Bank of China to ease,” said Eric Zhu, an economist covering China and Hong Kong at Bloomberg Economics.

“Valuations of Hong Kong stocks are pretty low, [attracting] some long-term funds to come in. Good flow through the Stock Connect in the past two days have also given support to Hong Kong markets,” said Linus Yip, chief strategist at First Shanghai Securities.

China’s securities watchdog pledged again on Tuesday to shore up China’s tanking stock market, including measures that encourage more technology platform companies to go public either domestically or overseas.

In Shanghai, the city’s coronavirus cases halved overnight to 1,487, the lowest since March 24. The downward trend boosted hopes for easing of antivirus controls and also lifted market sentiment.

Biotech stocks rose after the National Development and Reform Commission, China’s top economic planning agency, released a five-year plan to support the sector on Tuesday, including help for outstanding firms to get listed on mainland boards. WuXi Biologics surged 9.9 per cent, while Sino Biopharmaceutical and CSPC Pharmaceutical Group soared at least 4 per cent.

Chinese property agency KE Holdings, which started trading in Hong Kong on Monday, rose 2.3 per cent to HK$31.65. The Tencent-backed firm is one of the few Chinese companies with a dual-listing status in Hong Kong, which shields it from a potential delisting from American exchanges in case it fails to meet auditing requirements.

The Hong Kong dollar briefly weakened to HK$7.8500 against the US dollar overnight. That could soon prompt the city’s monetary authority to step in and bolster the exchange rate, returning it to its trading band of between HK$7.7500 and HK$7.8500 per dollar.

Major Asian markets saw mixed trading on Wednesday. Japanese shares gained 0.2 per cent, while stocks in Australia and South Korea dipped at least 0.1 per cent.

Author: Cheryl Heng, SCMP

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