Hong Kong stocks rebound from near 21-month low as tech sell-off, cheap valuations lure investors

·2-min read

Hong Kong stocks rebounded from near a 21-month low as traders sought bargains in battered Chinese tech companies on valuation appeal, even as the city’s reimposed of tough social-distancing measures to stem Covid-19 cases.

The Hang Seng Index gained 0.7 per cent to 23,072.86 at the close on Thursday, reversing an earlier decline of as much as 0.9 per cent to the lowest level since April 2020. The Tech Index rallied 1.4 per cent, overturning a 1.7 per cent slide. The Shanghai Composite Index fell 0.3 per cent.

Stocks had earlier declined in tandem with a global market sell-off on interest-rate fears, pushing the local market to its worst start to a year since 2005. The sell-off in tech stocks, triggered by a Tencent’s divestment, erased US$71 billion from the 30 members of the Hang Seng Tech Index on Wednesday.

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“It’s possible that Hong Kong stocks are already near the bottom as the valuations are pretty attractive,” said Xue Wei, analyst at Ping An Securities. “But stocks are still volatile in the short term.”

Alibaba Group, the owner of this newspaper, jumped 5.7 per cent as the biggest index gainer. The stock price almost halved last year. Tencent rose 1.5 per cent, while Meituan and JD.com, both partly owned by the WeChat operator, gained at least 3.6 per cent.

Markets in Asia-Pacific were broadly lower. The Nikkei 225 Index in Japan dropped by more than 1 per cent, tracking an overnight pullback in US equities. Minutes from the Federal Reserve’s previous meeting signalled a quicker unwinding of monetary stimulus. Ten-year Treasury yield rose to the highest since April.

Meanwhile, Hong Kong reimposed some of the toughest social distancing rules to combat a fifth wave of Covid-19 as the Omicron cases in the city increased. Flight from eight countries including the US and the UK will be suspended, bars and gyms will be closed and dine-in services will be banned after 6pm local time.

China Resources Power slumped 7.7 per cent, heading for a 17 per cent decline this week, on speculation that it will spin off its green-energy operations.

Elsewhere, semiconductor maker C*core Technology jumped 11 per cent from its initial public offering price to 46.72 yuan on the first day of trading on Shanghai’s Star Market.



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