- A private report shows Chinese manufacturing remained in contraction last month, contrasting with an official report signalling an expansion
- The Federal Reserve is expected to downshift in its rate increases this year, starting from this week’s meeting, as US inflation slows
Hong Kong stocks advanced, snapping a two-day slide, as tech stocks rallied before a Federal Reserve meeting interest rate later today. A private manufacturing report suggests China’s economic recovery will be bumpy.
The Hang Seng Index closed higher 1.05 per cent at 22,072.18, recouping some of the 3.7 per cent setback over the past two days. The Tech Index jumped 3.37 per cent while the Shanghai Composite Index increased 0.9 per cent.
Alibaba Group gained 2.2 per cent to HK$110 while Meituan climbed 3.2 per cent to HK$180.10. BYD led carmakers higher, surging 6.1 per cent to HK$260 while peer Xpeng rallied 10.3 per cent to HK$43.75 and Nio advanced 6.3 per cent to HK$97.50.
Most banks declined, with HSBC losing 1.6 per cent to HK$57.05 and China Merchants Bank sliding 1.6 per cent to HK$50.54.
“The market is in a wait-and-see atmosphere” before the Fed meeting outcome, said Kenny Ng Lai-yin, a strategist at Everbright Securities. Turnover during this week’s pullback “was relatively active, reflecting heavy short-term selling pressure,” he added.
The Fed is expected to raise its key interest rate by 25 basis points later today, downshifting from consecutive jumbo hikes in its last four meetings in 2022. Consumer prices in the US have declined in recent months, after surging to a four-decade high while the unemployment rate fell.
The Hang Seng Index has risen 48 percent from the trough in late October, adding US$1.5 trillion of capitalisation to the Hong Kong market. That included a 10.4 per cent gain in January, making it the best performer among major global benchmarks.
Stocks earlier wavered after a three-month rally on China reopening theme ran out of gas. A China fund manager warned stocks could lose as much as 18 per cent over the next two months. Some analysts said more signs of economic recovery are needed to support prices. China’s reopening may benefit the services sector more than online platform companies, BCA Research said in a report.
China’s Caixin/S&P Global PMI manufacturing index rose to 49.2 in January from 49 in December, data released on Wednesday showed, trailing consensus for an increase to 49.8. The contraction contrasted with a government report this week showing the industry expanded for the first time in four months.
Brokerage Cinda Securities surged 44 per cent to 11.88 yuan on its first day of trading in Shanghai.
Markets in Asia traded higher, with benchmarks in Japan adding 0.1 per cent while, Australia and South Korea rose by 0.3 per cent and 1 per cent respectively.
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