Hong Kong stocks advanced for a second session, as JD.com and Xiaomi soared, countering big losses by Huawei-linked shares as the US toughened curbs on the China tech giant and its supply ecosystem.
The Hong Kong benchmark spent the Tuesday session struggling for direction, but ended with a 0.1 per cent gain at 25,367.38. That was its fifth straight close above 25,000 points, an important threshold.
On the mainland, the Shanghai index rose 0.4 per cent to 3,451.09. Trading sentiment continued to be buoyed by the central bank’s move on Monday to inject liquidity into the financial markets to support banks, sending the Shanghai Composite up 2.3 per cent.
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Asia markets were mixed. Japan’s Nikkei 225 dipped 0.2 per cent while South Korea’s Kospi slid 2.5 per cent. Australia’s S&P/ASX 200 rose 0.8 per cent.
In Hong Kong, the drama of the session centred on tech stocks.
Sunny Optical Technology, which supplies components to Huawei, plunged 9.5 per cent to H$134.20, as investors ran for the exits on both worse-than-expected net income in the first half of the year and tighter rules out of the US prohibiting any company from selling Huawei products made with US technology without permission.
Other Huawei suppliers got clobbered as well. BYD Electronics plunged 11.6 per cent to HK$28.70, while AAC Technologies Holdings fell 2.5 per cent to HK$55.40.
But it was a spectacular day for JD.com, China’s second largest e-commerce platform that began its secondary listing in the city in mid June. It shot up 9.5 per cent to HK$265.60 after reporting net profits surged nearly 26-fold to 16.4 billion yuan (US$2.3 billion) for the second quarter, compared to 619 million yuan in the same period in 2019.
“JD Retail continued to enjoy economies of scale and JD Logistics registered positive margins for the first time,” Daiwa Capital Markets analysts wrote. “The active user growth in lower-tier cities and the market share expansion by category were encouraging, which should help JD sustain long-term growth through further market share gains.”
Tech winners outweighed the losers, leaving the new Hang Seng Tech Index ahead by 1.7 per cent. That marked the fourth straight day of gains for the index of 30 leading tech companies traded in the city.
Wuxi Biologics, China’s largest drugs development and manufacturing services provider, closed ahead with a 4 per cent gain after reporting net profits grew nearly 64 per cent to 736.1 million yuan in the first half of the year.
Smartphone vendor Xiaomi reached an important milestone, as it rose 6.4 per cent to HK$17.24. That put it back – after two years of struggling – of trading back at its IPO listing price HK$17. JPMorgan raised it to outperform from neutral and boosted its price target to HK$21.
Both Xiaomi and WuXi Biologics will be added to the benchmark Hang Seng Index on September 7.
Benchmark heavyweight Tencent rose 1.5 per cent to HK$512. The technology giant hired its first Washington lobbying firm as the Trump administration moves to crack down its social networking and mobile payment app WeChat, Politico reported on Monday.
Shares in Kweichow Moutai, the world’s most valuable liquor distiller and one of the most heavily traded stocks on the Stock Connect, rose 0.9 per cent to 1,705 yuan. That was its first time to reach 1,700 yuan in a month.
Four companies debuted in the mainland, with chip-maker Verisilicon Microelectronics Shanghai rocketing 284 per cent on the Star Market, where there are essentially no limits on price movements during the first week.
Nanya New Material Technology, which manufactures circuit boards and other electronic components, closed with a 88.8 per cent gain.
Hubei Juneyao Big Healthy Drinks and auto parts maker Kunshan Huguang Auto Harness soared by the daily upside limit on most boards of 44 per cent.
Additional reporting by Ji Siqi and Deb Price
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This article Hong Kong stocks gain for second session, with tech index advancing on big surges by JD.com and Xiaomi first appeared on South China Morning Post