Hong Kong, China stocks advance as sentiment remains positive on Beijing stimulus, ultimate success in containing coronavirus

Iris Ouyang

Stocks in Hong Kong and mainland China advanced Friday on expectations of additional stimulus out of Beijing and eventual success in defeating the novel coronavirus.

The Hang Seng Index rose 0.3 per cent to 27,815.6. That left Hong Kong’s benchmark with a 1.4 per cent weekly gain.

On the mainland, the Shanghai Composite Index rose 0.4 per cent to 2,917, also leaving it with a weekly 1.4 per cent gain.

The Shenzhen Component Index climbed 0.5 per cent to 10,916.31, while the CSI 300 gauge of large caps traded in Shanghai and Shenzhen increased by 0.7 per cent to 3987.73.

“Sentiment is still driven by excessive liquidity and lower funding costs in mainland China,” said Alan Li, portfolio manager at Atta Capital. “People expect the positive impact from reducing interest and bank reserve rate rather than the threat from virus.”

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China’s central bank has injected 1.7 trillion yuan liquidity into its banking system and issued various policies to increase loans, especially for small and medium-sized enterprises hit hard by the coronavirus.

Government advisers are circulating ideas in Beijing to further cut interest rates and allow the fiscal deficit ratio to exceed the 3 per cent level.

“The market is losing steam today,” said Linus Yip, chief strategist at First Shanghai Securities.

The real impact of the novel coronavirus on the whole China economy and performance of listed companies has not been reflected yet.

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But Yip noted the latest numbers on the virus were lower than the big spike on Thursday after a change in how infections are counted, suggesting control efforts are working. “People are not that worried as there are policies issued to support companies,” he added.

The official death toll neared 1,400.

Technology companies in Hong Kong took a hit.

Alibaba fell 1 per cent to HK$215 after it reported strong December quarterly results but warned of upheaval to consumer behaviour by the coronavirus outbreak. Alibaba, the e-commerce giant that owns the South China Morning Post, is considered a bellwether for the entire Chinese economy.

Ping An Good Doctor, an online medical services platform whose usage surged amid the unprecedented lockdown of more than 50 million people in China, slid 2.8 per cent to HK$74.20.

“It’s the adjustment after rise,” Yip said. Ping An Good Doctor has risen 31 per cent so far this year.

Chinese smartphone maker Xiaomi declined 2.1 per cent to HK$13.10, even though the company launched its latest 5G phones Mi 10 series, with sales exceeding 200 million yuan today within the first minute of its online sales.

“Having good news is positive, but currently investors in the market are relatively cautious,” Yip said of Xiaomi’s stock price slip. “Some stocks, including Xiaomi, at a relatively high level would still face pressure to readjust.”

On the Hang Seng Index, property stocks gained, with Wharf Real Estate Investment Company rising 2.5 per cent and Country Garden advancing 2.4 per cent.

Guangzhou Automobile Group shed 2.2 per cent and Geely Auto was down 0.6 per cent, after both companies reported double-digit percentage slumps in sales in January.

HSBC Holdings ticked up 0.4 per cent ahead of its 2019 full year results to be released next Tuesday, shrugging off news that one HSBC employee is in Hong Kong government quarantine after close contact with virus-infected relatives.

On the mainland, the diversified financial sector and securities brokerages led gains.

Financial firms in Anhui province were boosted by 2 billion yuan of special funds released into the eastern region in China.

Anhui Xinli Finance shot up 10 per cent – the daily limit – to 6.27 yuan. Guoyuan Securities closed 9.3 per cent higher to 8.81 yuan.

Meanwhile, stocks related to blood testing soared as plasma from recovered patients could be used in fighting the coronavirus. A gauge tracking 10 blood products companies by data provider Xuangubao rose 7.1 per cent. Shanghai RAAS Blood Products increased by 7.8 per cent to 10.18 yuan. Hualan Biological Engineering rose 3.8 per cent to 42.99 yuan.

Luxshare Precision Industry closed 0.6 per cent higher at 44.36 yuan, while Kweichow Moutai slipped 0.3 per cent to 1,088 yuan.

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