Hang Seng Index fails to sustain above 30,000 level on overheating concerns as technology stocks lose steam

23-Jan-2021 Intellasia | South China Moring Post | 6:02 AM Print This Post

Hong Kong stock advanced as traders greeted the inauguration of President Joe Biden by driving the benchmark index past the 30,000-point level for the first time since May 2019, before surrendering gains in late-trading.

The Hang Seng Index slipped 0.1 per cent to 29,927.76 at the close of trading, after mounting a third attempt at 30,000-point level this week. The gauge earlier rose to as high 30,135.50, a level not seen since May 2019, before a pullback in technology stocks set in on overheating concerns.

The Hang Seng Tech Index, which tracks 31 of the biggest players in the sector, shed 0.8 per cent. Xiaomi slid 3.1 per cent to HK$30.95 while Alibaba Group Holding, the owner of this newspaper, declined 2.4 per cent to HK$258.60. Tencent surged past HK$700 before easing to HK$682.50 for a 0.4 per cent gain.

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Stocks in mainland China gained. The Shanghai Composite Index added 1.1 per cent to 3,621.26 while the ChiNext tech board rose 2.5 per cent to 3,283.72. Both climbed to the highest level in at least 4.5 years. The CSI 300 index, which tracks the biggest companies on Shanghai and Shenzhen bourses, added 1.6 per cent.

Despite today’s setback, the Hang Seng Index has appreciated almost 10 per cent since the last trading day of 2020, marking the market’s most bullish start to a year since 1985. Sino Biopharmaceutical surged 4 per cent while HSBC added 2.5 per cent. Bourse operator Hong Kong Exchanges & Clearing climbed 1.6 per cent on the back of mainland fund inflows.

China’s mutual funds have ploughed HK$205.6 billion (US$26.5 billion) into the city’s stock market so far this year, according to stock exchange data. The net inflows slowed to HK$16.3 billion on Thursday from HK$20.3 billion on Wednesday. Still, those purchases, or southbound flow through the Stock Connect programme, in January amounted to almost a quarter of inflows on average in 2020.

Five mutual funds that each collected 12 billion yuan (US$1.9 billion) in October to participate in Ant Group’s stock offerings have been channelling their unused cash to Hong Kong stocks instead, earning decent returns from their forays, according to data on their websites.

“The mutual funds are quite attractive, not much change will occur to the trend that southbound funds continue to flow into the Hong Kong market,” said Alan Li, portfolio manager at Atta Capital in Hong Kong. “Some adjustments may happen. Investors tend to [lock up] short-term profits” which may undermine the 30,000 level, he added.

Demand for local assets lifted the Hong Kong dollar to HK$7.7516 against the US currency during the day, the strongest level since December 15.

Tech stocks appeared to have been rattled by China’s central bank announcement on Wednesday, giving its definition of monopoly in the digital payment space to guide the industry following an antitrust clampdown. The proposed rules are the most detailed yet to curb concentration in China’s $29 trillion e-payment market.

Markets around the Asia-Pacific region rose on optimism relations between the US and China, the world’s two biggest economies, will improve as Joe Biden began his presidency. The S&P/ASX 200 in Australia, South Korea’s Kospi Index and the Nikkei 225 all climbed by at least 0.8 per cent, after US equities mounted yet another new high overnight.

Elsewhere in Hong Kong, China Unicom lost 1.8 per cent, China Telecom declined 1.7 per cent, China Mobile was almost flat. The trio filed requests with the New York Stock Exchange for a review on its decision to delist their American depositary shares. They also requested for trading suspension of their US stocks to be retained.

The Hang Seng Index last climbed above the 30,000 level in April 2019, staying up for less than a month until May 3 that year. Before 2019, the level was decisively broken on January 2, 2018, holding up for about six months through June 15.

The surge this year has pushed the Hang Seng Index members into an “overbought” territory pretty much every day of the new year, according to Bloomberg data, based on a technical indicators known as the relative-strength index.

Stock debutants soared on the mainland bourses. Shanghai New Centurion Network Information surged by the daily cap of 44 per cent to 54.16 yuan. Hangzhou Yitong New Materials jumped 178.3 per cent to 36.48 yuan. general Elevator more than tripled to 16.20 yuan.



Category: Hong Kong

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