Most Hong Kong stocks gain on speculation China to inject more stimulus to revive confidence, corporate earnings

  • Stocks have struggled of late amid concerns China is not doing enough to prevent a sharper slowdown in the economy
  • Corporate earnings in focus as Li Auto and Sunny Optical failed to spark with their latest report cards

Most Hong Kong stocks rose on speculation policymakers in Beijing will inject more stimulus to shore up business and consumer confidence after official reports this week showed the economy struggled to overcome the effects of Covid-19 lockdowns.

The Hang Seng Index climbed 0.1 per cent to 20,063.64 as of local noon trading time, while the Tech Index added 0.1 per cent. The Shanghai Composite Index gained 0.2 per cent.

Meituan strengthened 0.4 per cent to HK$181.70 while JD.com added 2.3 per cent to HK$227.20. Country Garden jumped 9.5 per cent to HK$2.54 and Longfor Group soared 13.5 per cent to HK$25.15.

Limiting gains, electric-car maker Li Auto lost 2 per cent to HK$122.20 after fiscal third-quarter revenue trailed forecasts. Apple parts supplier Sunny Optical added 2 per cent to HK$122.90, despite its net income missing forecasts.

State-run media on Tuesday published articles suggesting more incentives were needed to stabilise the economy and halt rising joblessness, after the central bank on Monday unexpectedly lowered its key policy rates for the first time since January.

“We see yesterday’s cut as a policy shift, signalling a more dovish monetary policy stance ahead,” Standard Chartered said in a report on Tuesday. “We believe China’s authorities now prefer lower rates and a weaker yuan to stimulate growth.”

Government reports this week showed factory output and retail sales in China grew at a slower pace in July, missing consensus forecasts and slamming the yuan to a three-month low against the US dollar. A jump in coronavirus cases over the past month has triggered lockdowns in cities including Macau, Sanya and Yiwu.

With 16 per cent of Chinese companies having reported their first-half earnings, average earnings are up 4 per cent compared with a year ago, according to analysts at Goldman Sachs in a Saturday report.

Property developers jumped on optimism China will intervene to support the crisis-hit sector after recent mortgage boycotts and a deepening slump in home sales and prices. China Overseas Land jumped 5.1 per cent to HK$20.50 and China Resources Land rallied 4.6 per cent to HK$31.05.

GKG Precision Machine Company soared 85 per cent to 85.90 yuan on its first day of trading in Shenzhen, while Zhejiang Hisun Biomaterials Company jumped 34 per cent to 22.36 yuan in Shanghai.

Asian markets were mixed on Tuesday. Japanese stocks lost 0.1 per cent, while South Korean and Australian equities rose 0.4 to 0.6 per cent.

Author: Cheryl Heng, SCMP

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