Meituan, Tencent lift Hong Kong stocks from two-month low, stopping a four-day slide

·3-min read

Hong Kong stocks rose from a two-month low as higher-than-expected inflation in April strengthened calls for further policy support to soothe the economic strain caused by strict lockdown measures on the mainland. Falling coronavirus cases in Shanghai also boosted sentiment.

The Hang Seng Index gained 1 per cent to 19,824.57 at the close of Wednesday trading, ending a 7.1 per cent slide over the past four trading sessions. The Tech Index added 2.9 per cent, its strongest gain in a week, while the Shanghai Composite Index rose 0.8 per cent.

Meituan soared 6.3 per cent to HK$161.40, while Tencent Holdings strengthened 2.7 per cent to HK$350.40. NetEase added 2.8 per cent to HK$142.50 while BYD and Geely gained at least 6 per cent.

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“Valuations of Hong Kong stocks are pretty low, [attracting] some long-term funds to come in,” said Linus Yip, chief strategist at First Shanghai Securities. “Good flow through the Stock Connect in the past two days has also given support to Hong Kong markets.”

Factory-gate prices in mainland China rose by 8 per cent last month, faster than a projected 7.7 per cent by analysts in a Bloomberg survey. Producer prices had increased 8.3 per cent in March. The statistics bureau’s consumer inflation data on Wednesday showed that prices accelerated to 2.1 per cent from 1.5 per cent, exceeding analysts’ estimates.

“The moderating producer prices and benign consumer price inflation open a wider path for the People’s Bank of China to ease,” said Eric Zhu, an economist covering China and Hong Kong at Bloomberg Economics.

China’s securities watchdog pledged again on Tuesday to shore up China’s tanking stock market, including measures that encourage more technology companies to go public either domestically or overseas.

In Shanghai, the city’s coronavirus cases halved overnight to 1,487, the lowest since March 24. The downward trend boosted hopes for easing of antivirus controls and also lifted market sentiment.

Biotech stocks rose after the National Development and Reform Commission, China’s top economic planning agency, released a five-year plan to support the sector on Tuesday, including help for outstanding firms to get listed on Chinese exchanges. WuXi Biologics surged 5.7 per cent, while Sino Biopharmaceutical and CSPC Pharmaceutical Group rose at least 2 per cent.

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Chinese property agency KE Holdings, which started trading in Hong Kong on Monday, slipped 0.7 per cent to HK$30.75. The Tencent-backed firm is one of the few Chinese companies with a dual-listing status in Hong Kong, which shields it from a potential delisting from American exchanges in case it fails to meet auditing requirements.

The Hong Kong dollar briefly weakened to HK$7.8500 against the US dollar overnight. That could soon prompt the city’s monetary authority to step in and bolster the exchange rate, returning it to its trading band of between HK$7.7500 and HK$7.8500 per dollar.

Major Asian markets saw mixed trading on Wednesday. Japanese and Australia shares gained 0.2 per cent each, while stocks in South Korea dipped 0.2 per cent.

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