Alibaba up 1%, Xiaomi up 4%: Hong Kong Stocks Arrest Two-Day Slide on Mainland Fund Inflows

South China Morning Post2023-02-09
  • Goldman sasys there’s more upside to Chinese stocks even after recent rally as economic growth rebounds from reopening drive
  • Some traders bet on higher Fed terminal rate in 2023 versus current consensus, causing jitters on ‘downshift’ camp

People watching stock prices on an electronic board in Mong Kok, Hong Kong. Photo: David Wong

Hong Kong stocks advanced on optimism there is more room for upside in the market on the back of China reopening boost. Limiting gains, bets for higher peaks in the Federal Reserve’s current policy tightening cycle than current consensus kept risk appetite in rein.

The Hang Seng Index rose 0.3 per cent to 21,352.02 at as of 10.45am local time, snapping a two-day slide. The Tech Index added 0.3 per cent while the Shanghai Composite Index climbed 0.7 per cent.

Alibaba Group jumped 1.4 per cent to HK$105.0, Meituan added 0.6 per cent to HK$154 and JD.com gained 0.5 per cent to HK$220.40. Chinese property developer Longfor Group gained 1.4 per cent to HK$25.30 and casino operator Sands China jumped 2.5 per cent to HK$28.70.

“China’s ongoing reopening [will] provide boosts to global growth, inflation, and China-exposed assets,” Goldman Sachs analysts including Kinger Lau said in a note on Wednesday. There is more upside for China equities from here even after the recent sharp rally, they added.

Mainland investors bought HK$300 million (US$38 million) worth of stocks so far on Thursday, narrowing the net selling this week to HK$1.3 billion (US$165 million), according to Stock Connect data.

The Hang Seng Index appreciated as much as 55 per cent from the low in late October after China abandoned its zero-Covid policy. The three-month rally, however, is losing some momentum, with the city’s benchmark index losing 6.2 per cent since peaking on January 27.

Still, caution prevailed. Some rate traders have placed bets the Fed will lift the terminal rate this year to as high as 6 per cent, according to Bloomberg, versus the consensus dot-plot of 5.125 per cent among policymakers. The US central bank downshifted this month by raising the Fed funds rate 25 basis points to a range of 4.50 to 4.75 per cent.

The Nasdaq Composite slumped 1.7 per cent in New York overnight. The jitters also infected local stocks that rallied this week on the ChatGPT-linked craze, and abetted by a sell-off in Alphabet, the owner of Google. Zhihu slumped 11.7 per cent to HK$28.65 while Baidu slipped 6.3 per cent to HK$147.50.

Two stocks debuted in Shenzhen. Hunan Yuneng New Energy surged 122 per cent to 52.73 yuan, while materials supplier Shanghai Allied Industrial jumped 42 per cent to 35.23 yuan.

Asian stocks retreated on the Fed’s hawkish outlook. The Kospi in South Korea lost 0.1 per cent and the S&P ASX 200 index in Australia dropped 0.2 per cent, while the Nikkei 225 index in Japan slipped 0.4 per cent.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

Leave a comment
6