Hang Seng Index advances as Meituan rally squeezes short-sellers, Alibaba slips on new investigation

Iris Ouyang
·3-min read

Hong Kong stocks rose for a third day, lifting the benchmark to a four-week high as Meituan climbed after unveiling an almost US$10 billion fundraising. Alibaba Group Holding weighed on market sentiment.

The Hang Seng Index added 0.1 per cent at 29,135.73 at the close of Tuesday trading, after swinging between gains and losses. The gauge climbed to a four-week high on Monday. The Shanghai Composite Index fell 0.1 per cent to 3,472.94.

Meituan jumped 1.5 per cent to HK$293.60 after disclosing a plan to sell shares and convertible bonds worth US$9.6 billion to fund research and development in autonomous delivery vehicles, drone delivery and other cutting-edge technology.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Meituan short-sellers were squeezed after it emerged that Tencent Holdings, a 20 per cent owner of Meituan, agreed to subscribe for US$400 million worth of Meituan shares, according to people familiar with the top-up stock offering. A typical squeeze would prompt such investors to buy the stock to cover their bets.

Alibaba dropped 1.6 per cent to HK$228.20 after Shanghai-listed Minmetals Development said after market close on Monday that the Chinese government had started an investigation into the company’s joint-venture with the e-commerce group, the owner of this newspaper.

Meanwhile, mainland investors have plowed HK$26.1 billion in net buying of Hong Kong-listed stocks so far in April, according to stock exchange data, after withdrawing HK$12.7 billion in March. The inflows pale in comparison with the average of HK$124.3 billion in the first quarter and HK$67.2 billion in the fourth quarter last year.

“The HSI lacks the momentum to rise when lacking the boost from southbound funds,” said Kenny Tang Sing-hing, chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators. “The gauge will edge up after two to three months of horizontal price movement.”

He added the outlook of China’s economic growth and especially consumption will be major factors impacting the Hang Seng Index trend.

Elsewhere, car makers surged amid frequent news updates on electric vehicle ventures as new players including Xiaomi and Huawei Technologies stepped up efforts in the sector. Bohai Automotive Systems and BAIC BluePark rose by the daily cap of 10 per cent on mainland bourses. Geely Auto added 1.1 per cent in Hong Kong.

China Mobile, China Unicom and Ping An Insurance will kick off the release of first-quarter earnings by the companies on the Hang Seng Index starting Tuesday. Hang Seng Index members probably posted a 25 per cent increase in profits for the first three months of 2021, according to Bloomberg data, compared with a 30 per cent decrease a year earlier.

President Xi Jinping delivered a speech via teleconference at a four-day Boao Forum in Hainan. He stressed that countries should enhance cooperation in technological areas such as artificial intelligence, biotechnology and new energy.

Additional reporting by Alison Tudor-Ackroyd and Zhang Shidong

More from South China Morning Post:

This article Hang Seng Index advances as Meituan rally squeezes short-sellers, Alibaba slips on new investigation first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2021.