Hang Seng Index rises as Xiaomi papers over cracks technology stocks and three new benchmark members slip

Martin Choi
·3-min read

Hong Kong stocks gained as smartphone maker Xiaomi soared after a US court suspended a ban on Americans investing in the company. The rally overshadowed losses in technology giants and mainland bourses after China signaled tighter scrutiny of internet monopolies.

The Hang Seng Index rose 0.3 per cent to 28,883.76 at the close, after tumbling 2.2 per cent on Friday for its biggest fall in two weeks, courtesy of a surge in smartphone maker Xiaomi Corp. The Hang Seng Tech Index fell 2.3 per cent. Benchmarks in mainland markets retreated amid heightened regulatory concerns.

Xiaomi rallied 7 per cent to HK$24.35 for the stock’s biggest one-gain surge since December, paring an advance of as much as 12 per cent, overshadowing steep losses in technology peers. Xiaomi has a 3 per cent weighting in the Hang Seng Index, according to Bloomberg data.

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A US court on Friday suspended a US government ban prohibiting US persons from owning its shares because of alleged ties to the Chinese military. CNOOC, which also faces US sanctions, jumped 1.6 per cent to HK$9.12.

Technology stocks cracked again, China’s antitrust regulator fined entities related to a dozen groups including Tencent Holdings, Alibaba Group Holding, JD.com and Meituan for disclosure failures. The maximum fines, though small in sum, signaled enforcement against internet monopolies was strengthening.

“The bets on the technology giants may still face pressure in the short term,” said Gao Jingdong, an analyst at Shanxi Securities International. “China’s move to get tougher on the monopolistic practices and sprawling capital expansion, coupled with the lofty valuations of the tech stocks, will continue to drag down share prices.”

Tencent fell 3.5 per cent to HK$628, while JD.com plunged 6.2 per cent to HK$322.20 and Meituan declined 4.7 per cent to HK$317.20. Alibaba, the owner of this newspaper, dropped 2 per cent to HK$221.40.

The CSI 300 Index of the biggest stocks in Shanghai and Shenzhen declined 2.2 per cent. The Shanghai Composite fell 1 per cent, while the tech-heavy ChiNext in Shenzhen lost 4.1 per cent amid concerns about a fintech industry clampdown.

Market favourites, or so-called “bubble stocks,” were slammed again in rotation play. Battery maker Contemporary Amperex Technology fell 8.5 per cent to 312.30 yuan in Shenzhen. Liquor distiller Kweichow Moutai fell 2.5 per cent to 1,975.45 yuan in Shanghai, while China Tourism Group Duty Free dropped 3.8 per cent to 297.80 yuan.

Hong Kong expands benchmark index in major revamp with US$68 billion at stake

Alibaba Health Information Technology, mainland Chinese developer Longfor Group and hotpot chain Haidilao International joined the benchmark Hang Seng Index as constituent stocks on Monday. They fell by 1.7 per cent to 4.3 per cent.

Autohome, a Chinese online platform for buying and selling cars, gained 2.1 per cent to HK$180 in Hong Kong from its secondary listing price of HK$176.30.

Markets in Asia-Pacific were mixed. Japan’s Nikkei 225 added 0.2 per cent, while South Korea’s Kospi slipped 0.3 per cent. Australia’s S&P/ASX 200 edged up 0.1 per cent.

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