Hong Kong stocks add to best rally since April as beaten-down tech regains favour

·2-min read

Hong Kong stocks rose for a second day, adding to the biggest rally in almost three months, as investors cast aside recent worries about faster inflation and higher interest rates to pick up beaten-down tech companies.

The Hang Seng Index climbed 0.2 per cent to 28,882.46 at the close. The gauge surged 1.8 per cent on Wednesday, the most since April 1. China’s Shanghai Composite Index rose less than 0.1 per cent.

Xinyi Solar jumped 3.1 per cent, making it the best benchmark performer, as traders bet it will benefit from the Biden administration’s plans to sanction rival solar products made in the Xinjiang autonomous region.

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Meituan and Alibaba Health Information climbed at least 2.1 per cent, while JD Health and Bilibili added more than 2.6 per cent, helping the Tech Index to a second day of advance.

Other major markets in Asia were mostly steady, as traders digested comments this week by Federal Reserve officials on the path to policy normalisation. US tech stocks traded on the Nasdaq rose to a record in overnight trading, fanned by a rally in electric car maker Tesla. A government report showed that manufacturing in the US expanded in June at the fastest pace in records dating back to 2007.

“Equities have quickly bounced back from last week’s Fed-induced sell-off as investors realised interest rates will not move anytime soon,” said Edward Moya, an analyst at Oanda.

Fed Chair Jerome Powell soothed market concerns by reiterating in a Congress testimony this week that policymakers will be patient in raising borrowing costs despite recent inflationary pressures.

Still, stocks in Hong Kong will probably be rangebound in the second half. Liquidity remains relatively tight and China’s clampdown on the technology sector continues to weigh on market sentiment, according to Shenwan Hongyuan Group.

China Evergrande Group, the world’s most indebted property developer, jumped 4.2 per cent to HK$10.90. The firm said it wired HK$13.6 billion (US$1.75 billion) into a debt-repayment account to redeem a dollar-denominated bond maturing on June 28.

Hunan Valin Wire and Cable, which makes special and power cables for electrical equipment and conductors, surged 44 per cent from its initial public offering price to 5.28 yuan in its Shenzhen trading debut.

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