Hang Seng Index reclaims 31,000 level as investors increase exposure to Hong Kong stocks amid expectations of strong southbound inflows

Martin Choi
·4-min read

Hong Kong stocks rose for a seventh straight session on Wednesday, closing at its highest level in more than 32 months as investors rushed into the market amid expectations of strong southbound inflows from the mainland when trading resumes.

The Hang Seng Index added 1.1 per cent to 31,084.94, its best finish since June 12, 2018, after losses of as much as 0.8 per cent in early trading amid investor concerns over rising Treasury yields. It rose 1.9 per cent on Tuesday to kick off the first trading day in the Year of the Ox.

The markets in mainland China resume trading on Thursday following the Lunar New Year holiday.

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“Investors have increased exposure to Hong Kong stocks before the mainland markets open, as they expect strong southbound inflows,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.

Technology stocks rose, sending the Hang Seng Tech Index of top technology companies up 2.3 per cent to a record high of 10,945.22.

AAC Technologies, a major supplier of components to Apple, led gains on the benchmark Hang Seng Index, rising 7.1 per cent to HK$48.20.

Chinese oil producers were also among top gainers, as a deep freeze in the southern US halted production at oil wells and refineries. Sinopec added 5.3 per cent to HK$4.34, while CNOOC rose 4.5 per cent to HK$9.97.

Macau gaming stocks also gained, with Sands China rising 4.9 per cent to HK$36.15 and Galaxy Entertainment adding 1.2 per cent to HK$69.80. Tourist arrivals to Macau reached 77,383 in the first six days of the Lunar New Year break from February 11 to 16, according to government figures released on Wednesday.

Chinese e-commerce giant JD.com rose 6.4 per cent to HK$416.80. The logistics unit of JD.com was set to sell its shares through an initial public offering (IPO) on the Hong Kong stock exchange, according to a late night filing on Tuesday.

Cinema-related stocks took a breather, after surging on Tuesday on the back of record box office receipts in China.

IMAX China Holding, the provider of wide format theatre systems in Greater China, eked out gains of 0.4 per cent to HK$18.44, after rising 31.1 per cent to its highest level since January 17, 2020. Alibaba Pictures, the distributor of the Oscar-winning Green Book, fell 7.6 per cent to HK$1.33 after rising 34.6 per cent to a 13-month high.

Shares of Gome Retail Holdings fell 13.8 per cent to HK$1.94, giving up some of the gains from the 33.9 per cent surge a day earlier. Its founder and former chairman Wong Kwong-yu, who had been arrested in 2008 on suspicion of “economic crimes”, completed his parole probation period on Tuesday and “has been officially released”, the company said in an exchange filing on Wednesday.

Gome Finance Technology, which provides credit and loans, tumbled 12.8 per cent to HK$1.09, after soaring by as much as 50 per cent on February 11 before the Lunar New Year holiday trading break.

JD.com rose 6.4 per cent after the logistics unit of the Chinese e-commerce giant said it planned to launch an IPO in Hong Kong. Photo: Kyodo
JD.com rose 6.4 per cent after the logistics unit of the Chinese e-commerce giant said it planned to launch an IPO in Hong Kong. Photo: Kyodo

“For the most part, investors remain reassured by expectations of another round of US stimulus and ongoing support from the Fed,” said Stephen Innes, chief global markets strategist at Axi. However, investors were “getting antsy about higher US yields,” he added.

On Tuesday, the yield on benchmark 10-year US Treasuries rose above 1.3 per cent for the first time since February 2020 when the pandemic broke out.

However, US President Joe Biden’s backing for the US$1.9 trillion stimulus package has given markets a boost recently, along with the steady roll-out of coronavirus vaccines around the world.

Markets in Asia-Pacific fell. Japan’s Nikkei 225 eased 0.6 per cent, while South Korea’s Kospi dropped 0.9 per cent. Australia’s S&P/ASX200 retreated 0.5 per cent.

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