Tencent, Alibaba power Hang Seng Index rally as mainland funds pile in and investors look to Kuaishou IPO windfall

Iris Ouyang
·3-min read

Hong Kong stocks rose for a second day as technology leaders rallied on earnings optimism and mainland funds continued to pile into the local markets.

The Hang Seng Index surged 1.2 per cent to 29,248.70 on Tuesday. The gauge earlier gained as much as 2.1 per cent to recoup all of the 1,164-point decline last week before paring gains. The Shanghai Composite Index added 0.8 per cent at 3,533.68.

Tencent Holdings, the biggest index member with a 10.8 per cent weight, advanced 1.8 per cent to HK$724.50. Mainland traders were net buyers of HK$2.7 billion (US$343 million) of the stock on Tuesday on top of almost HK$5 billion on Monday.

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Meituan, with a 6.4 per cent index weight, rose 1 per cent to HK$395, as the overall net inflows from mainland into the Hong Kong stock market increased to HK$17.3 billion on Tuesday from HK$16.4 billion a day earlier, according to exchange data.

Pharmaceutical companies also saw hefty gains. CSPC Pharmaceutical soared by 9.2 per cent to HK$8.82. Sino Biopharmaceutical surged by 4.4 per cent to HK$7.61. Hotpot chain Haidilao International Holding soared by 10.4 per cent to HK$76.25, a record high.

This month inflows have added to more than HK$310 billion of injection in January alone and HK$59.9 billion in December through the southbound channels of the Stock Connect programme. They have been aiding gains in tech leaders including Tencent and SMIC, as well as Chinese telecoms stocks sanctioned by the US.

“This round of correction has finished and mainland funds continue to flow into Hong Kong,” said Kingston Lin, managing director of the asset managing department at Canfield Securities. “It’s possible for the Hang Seng Index to inch up to 30,000 points within this week” as markets are filled with optimism, he added.

Alibaba Group Holding jumped 3.5 per cent to HK$260 before its third-quarter earnings later on Tuesday. The e-commerce group and owner of this newspaper is expected to show a 46 per cent jump in revenue for the period ended December 31, with earnings seen slipping 4 per cent, according to consensus compiled by Bloomberg.

The Hang Seng Tech Index, which includes 31 constituents, added 2.2 per cent. Yixin Group, an online automobile retail transaction platform, surged by 10 per cent to HK$2.86. JD.com jumped 5.5 per cent to HK$372.40 after local media reports said its unit JD Logistics was planning to sell shares to the public.

The rally followed a 2.6 per cent jump in Nasdaq. Markets in Australia, South Korea and Japan logged between 0.8 per cent and 1.5 per cant gains.

Kuaishou sets record as retail traders overbought its IPO 1,200 times

The rebound in Hong Kong markets comes as investors look to score a windfall from Kuaishou Technology, which is making its debut on February 5. The stock is said to be fetching twice its HK$115 offer price in the gray market, Bloomberg reported.

On the mainland, catering and tourism stocks rallied in the run-up to the Lunar New Year holiday next week. China Tourism Group Duty rose 8.2 per cent and Hainan Dadonghai Tourism soared 10 per cent.

HNA-related stocks, however, continued to slump after the firms said that their related parties have misused billions of yuan of funds and after its parent HNA Group entered bankruptcy restructuring. HNA Technology and Hainan Airlines lost the daily cap of 10 per cent.

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