Hong Kong, China stocks gain as markets in Asia bank on US stimulus support

Martin Choi
·3-min read

Hong Kong and mainland China stocks rose, tracking gains in regional markets as investors look forward to a US$1.9 trillion coronavirus relief package in the US to spur a broader global recovery. Rare earth producers jumped again on concerns political unrest in Myanmar will squeeze supply.

The Hang Seng Index added 0.1 per cent to 29,319.47, after rising as much as 1.4 per cent on Monday. The benchmark rebounded 3.6 per cent last week. The Shanghai Composite rose 1 per cent to 3,532.45.

Power tools giant Techtronic Industries led gainers, rising 3.6 per cent to HK$126.40 while Macau casino operator Galaxy Entertainment appreciated 2.8 per cent to HK$68.60.

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Hong Kong Exchanges and Clearing added 0.3 per cent to HK$518.50 on the back of its purchase of a 7 per cent stake in Guangzhou Futures Exchange on Friday.

Australia’s S&P ASX 200 climbed 0.6 per cent while Japan’s Nikkei 225 surged 2.1 per cent. The Kospi Index in South Korea fell 0.9 per cent. US equity futures signalled more gains, after the cash market charted new highs on Friday on stimulus hopes.

President Joe Biden and his Democratic allies in Congress forged ahead with their stimulus plan on Friday as lawmakers approved a budget outline that would allow them to fast track the stimulus package in coming weeks. Treasury Secretary Janet Yellen said it could promote full employment next year, according to news reports.

The Hang Seng Index has risen more than 7 per cent this year, approaching the 30,000 again after several attempts to scale the level last month. A flood of cash from mainland funds via the Stock Connect programme has boosted stock prices, and a pause from February 9 could test the market resilience.

“There remains a lot of interest in Hong Kong stocks from retail money in the mainland that has not been completely satisfied,” said Alex Wong, director of asset management at Ample Capital said. “The Hong Kong stock market may get a bit quieter [without southbound trading], but that does not mean stocks will perform poorly.”

The performances of markets in the Asia-Pacific region and in the US are encouraging, Wong added.

Rare earth related stocks rallied. MMG soared 9.2 per cent to HK$3.56. Shenghe Resources rose 1.1 per cent to 17.17 yuan, while China Northern Rare Earth added 2.7 per cent to 16.76 yuan. Protests broke out in Myanmar, the world’s third-largest producer, after the February 1 military coup.

Five companies began trading on Monday, with genetic technology research company Suzhou Basecare Medical rising 1.2 per cent to HK$27.70 in Hong Kong.

In Shanghai, bio-engineering product manufacturer Beijing Kawin Technology Share-Holding gained 121.3 per cent to 42 yuan while dairy producer Zhe Jiang Li Zi Yuan Food rose 44 per cent to 28.86 yuan. Zhuzhou Huarui Precision Cutting Tools rose 132.4 per cent to 86.20 yuan.

In Shenzhen, Hengda New Materials Fujian, which manufactures metalworking machinery equipment, soared 380.8 per cent to 141.60 yuan.

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