The Hong Kong and mainland China markets rebounded on Wednesday, as investors took the opportunity to increase their positions after a huge plunge on Tuesday on concerns about the spreading Wuhan coronavirus.
In Hong Kong, the Hang Seng Index rose 1.3 per cent to 28,341.04, recording its biggest daily gain in nine sessions. On the mainland, the Shanghai Composite Index reversed early losses to close 0.3 per cent higher at 3,060.75. The Shenzhen Component gained 1.1 per cent and the ChiNext Index climbed by 1.4 per cent.
Investors in Hong Kong bought the dip after Tuesday’s huge declines, as the market carefully gauged how big an impact the virus outbreak could have on the mainland China and Hong Kong economies, according to Castor Pang Wai-sun, head of research at Hong Kong-based brokerage Core Pacific-Yamaichi.
“The 2.8 per cent plunge in the Hang Seng Index on Tuesday was indeed a bit too much, leading to some investors taking the chance to increase their positions,” he said. Hong Kong stocks recorded their worst day in over five months on Tuesday.
“The market is already expecting the virus will spread … the question is whether there will be bad news that escalates it to a whole new level to justify a significant fall in the market,” he said.
Chinese authorities on Wednesday confirmed nine people had died from the illness, while 440 people had been infected. All of the deaths were reported in central China’s Hubei province, where the virus first spread from the city of Wuhan.
Many investors bought pharmaceutical and health care-related stocks as a short-term strategy. Whether the Hang Seng can stand firm above the 28,000-point level could be critical in deciding the market’s future direction, Pang said.
In Hong Kong, Ping An Healthcare and Technology, China’s largest online medical platform, jumped 11.6 per cent to HK$74.8, on hopes the Wuhan coronavirus outbreak will spur new demand for online health care services. The company, better known as Ping An Good Doctor, operates a mobile app that allows its 289 million registered users to consult doctors remotely. Shares of the company have soared by 32 per cent so far this year.
Apple suppliers also rose on media reports that the smartphone maker was planning to launch a cheaper version of the iPhone in 2020. Smartphone components maker Sunny Optical Technology added 5 per cent and AAC Technologies Holdings gained 3.6 per cent.
Chinese smartphone maker Xiaomi surged 8.9 per cent to HK$13.9 on expectations that it will launch more 5G models this year.
In China, electronics manufacturers, computer-related stocks and telecommunications stocks led the advance. The technology sector has been on a powerful rally since the beginning of this year, driven by investors’ expectations that the semiconductor cycle has bottomed out, as well as growing demand for 5G networks.
A gauge tracking 135 domestic semiconductor companies rose 2.7 per cent, according to data provider Xuangubao. A total of 12 stocks jumped by the daily 10 per cent limit, including Jiangsu Jiejie Microelectronics, which has skyrocketed by 45 per cent this year.
More from South China Morning Post:
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