Hong Kong stocks gained for a third day as traders retained focus on global recovery prospects and the fallout from the implosion of New York investment Archegos Capital Management appears to have subsided for now.
The Hang Seng Index added 0.8 per cent to 28,577.50 at the close on Tuesday, with Chinese textile and apparel producer Shenzhou International topping the gainers. The Shanghai Composite Index climbed 0.6 per cent.
China’s one-year sovereign bonds rose after FTSE Russell said it would proceed with its plan to include the nation’s government debts to its global bond index in phases from October, marking a further step in opening up the Asian nation’s US$16 trillion domestic bond market.
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Investors kept their focus on the outlook of the global recovery outlook. Hong Kong on late Monday eased restrictions and quarantine requirements for global travellers in a move to reopen its borders. President Joe Biden is expected to unveil an additional stimulus package later this week, which will tilt towards infrastructure projects.
“As the contagion risk of the forced liquidation behind block sales in single name stocks lessens, investors feel less distracted” about the Archegos blow-up, said Stephen Innes, a strategist at AxiCorp. Biden’s infrastructure stimulus “could provide a smoother and lengthier runway for risk to initially take flight,” he added.
Market sentiment was also lifted by some good news on the vaccine front. Biden said that 90 per cent of the adults will be eligible for vaccination next month and a study from Pfizer and Moderna showed their doses effectively prevented coronavirus infections.
Other equity markets in Asia were mixed on Tuesday. The Topix index in Japan declined as much as 1.3 per cent, mainly dragged down by Nomura after the nation’s biggest brokerage warned of losses worth about US$2 billion tied to margin calls at an unnamed US fund, which media reports later identified as Archegos.
Investment banks including Goldman Sachs and Morgan Stanley sold about US$20 billion worth of shares including Baidu and Tencent Music Entertainment in block trades over the past few days, as Archegos failed to meet the margin calls.
Shenzhou International surged 9.5 per cent to HK$158.48 and Anta Sports climbed 1.1 per cent to HK$125 in Hong Kong. Chinese textile producers are profiting from a boycott of foreign brands such as H&M, Nike and Adidas following a controversy and allegations of forced labour used in Xinjiang-produced cotton.
Xiaomi Corp added 2.2 per cent to HK$25.60 after the Chinese smartphone maker unveiled a new line-up of 5G phones.
BYD slipped 0.4 per cent to HK$170.40 in Hong Kong after Citigroup said the carmaker’s first-quarter profit forecast fell short of market’s expectations. Its Shenzhen-traded shares rose 0.5 per cent to 169 yuan. Profits for the three months ending in March will probably rise by as much as 166 per cent from a year ago, it said.
Kweichow Moutai, the world’s most valuable distiller, gained 1.1 per cent to 2,056.05 yuan in Shanghai before its earnings report on Tuesday night. Net income probably increased 15 per cent from a year earlier in 2020, the company said in January.
Hynar Water Group surged 483 per cent from the initial public offering price to 49.44 yuan on the first day of trading in Shenzhen. Hangzhou Pinming Software jumped 79 per cent to 89.50 yuan on its debut in Shanghai.
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