Hong Kong stocks halt longest losing streak since September 2019 as investors pin hopes on recovery

Martin Choi
·4-min read

Hong Kong and China markets rose as investors deemed the recent sell-off overblown, while tracking gains in Asia-Pacific and Wall Street on hopes of an economic recovery.

The Hang Seng Index gained 1.6 per cent to 28,336.43, halting a five-day slide, its longest losing streak since September 2019, and rebounding from its lowest level in 11 weeks.

However, it still recorded a weekly loss of 2.3 per cent, its biggest since February 26, after regulatory risks in China and abroad forced investors to cut their positions. The benchmark is also on track for its worst month since September.

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Benchmarks in mainland China also gained. The CSI 300, which tracks some of the biggest stocks in Shanghai and Shenzhen, added 2.3 per cent, rebounding from its lowest level since December 11. The Shanghai Composite rose 1.6 per cent.

“The recent sell-off was overdone and is a buying opportunity,” said Dennis Lam, Hong Kong and China equities strategist at DBS. The Singapore-based lender believes the Hang Seng Index could reach a record high over the next 12 months despite the recent reversal, on considerations of a post-Covid 19 economic recovery.

Country Garden Holdings, China’s second largest developer by sales, paced gainers among blue chips in Hong Kong, rising 8.1 per cent to HK$9.73. It had cut debt by 43.1 billion yuan (US$6.6 billion) to 326.5 billion yuan last year, according to its annual results filing on Thursday.

Xiaomi soared 6.3 per cent to HK$25.40. Reuters reported that the smartphone giant was planning to make electric vehicles using Great Wall Motor’s factory.

Great Wall’s Hong Kong stock shot up 10.4 per cent to HK$21.90, while its Shanghai shares rallied by the 10 per cent upper trading limit to 30.95 yuan.

Shares of national sports brands rose as the Chinese government joined mainland consumers in pressing global fashion brands to reverse the Xinjiang cotton boycott and “correct their mistakes”.

Anta Sports rose 5.6 per cent to HK$128.10, among the top performing blue chips in Hong Kong. Li Ning rose 2.9 per cent to HK$51.45. Bosideng International rallied 7.2 per cent to HK$3.57.

China Evergrande New Energy Vehicle Group shot up 11.4 per cent to HK$63.00. The carmaker announced in a filing on Friday that it had received HK$21 billion from five investors as part of a share subscription agreement.

The technical “oversold” gauge this week dipped below 31 during intraday trading, according to data from Bloomberg. The so-called 14-day relative strength index reading for the Hang Seng Index was at the lowest level since September. A reading below 30 indicates oversold.

“The markets have been oversold. Investors have gone bottom fishing,” said Louis Tse Ming-kwong, managing director of Wealthy Securities. “There has been quite a bit of dumping of shares indiscriminately over the past few days. Technically, [the markets] deserve a rebound. But as for how far the rebound goes, we’ll have to see how much money comes into this market.”

In Shanghai, liquor distiller Kweichow Moutai gained 2.1 per cent to 2,013 yuan, while China Tourism Group Duty Free added 4.8 per cent to 313.43 yuan.

Four companies debuted on the Hong Kong and mainland bourses.

In Shanghai, water network services provider Haitian Water Group rose 44 per cent to 16.14 yuan from its listing price of 11.21 yuan. Optowide Technologies, which produces precision optics and fibre components, rose 54.8 per cent to 21.05 yuan from its debut price of 13.60 yuan.

In Shenzhen, Anhui Shiny Electronic Technology, which manufactures hardware products, soared 243.8 per cent to 44.18 yuan from its IPO price of 12.85 yuan.

A man walks past Haval brand SUVs made by China’s Great Wall Motor. The company’s shares rose after media reports said that smartphone maker Xiaomi plans to make cars at its factory. Photo: AFP
A man walks past Haval brand SUVs made by China’s Great Wall Motor. The company’s shares rose after media reports said that smartphone maker Xiaomi plans to make cars at its factory. Photo: AFP

In Hong Kong, Zhixin Group Holding, which manufactures building products, fell 29.3 per cent to HK$1.06 from its issue price of HK$1.50.

Markets in Asia Pacific gained. Japan’s Nikkei 225 added 1.6 per cent, while South Korea’s Kospi gained 1.1 per cent. Australia’s S&P/ASX 200 increased 0.5 per cent.

Wall Street benchmarks also rose overnight. The Dow Jones Industrial Average inched up 0.6 per cent, while the S&P 500 gained 0.5 per cent, and the Nasdaq Composite added 0.1 per cent.

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