Hang Seng Index tops 30,000 as mutual funds load up HK stocks, Biden inauguration spurs Asia-wide rally

22-Jan-2021 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong stocks 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 amid record purchases by mainland funds.

The Hang Seng Index climbed to as high as 30,135.50 before easing to 30,012.19 at local noon break for a 0.2 per cent gain. The gauge has risen 10.2 per cent since the last trading day of 2020, marking the market’s most bullish start to a year since 1985. The Shanghai Composite Index added 1.3 per cent to 3,629.61 while the ChiNext tech board rose 2.2 per cent to 3,276.57. Both reached the highest levels in at least five years. The CSI 300 index, which tracks the biggest companies on Shanghai and Shenzhen bourses, added 1.8 per cent.

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Sino Biopharmaceutical led gainers in Hong Kong, surging 4.6 per cent while HSBC rose 2.7 per cent to pace a rally in financial stocks. Bourse operator Hong Kong Exchanges & Clearing climbed 2 per cent.

Mainland mutual funds have ploughed HK$205.6 billion (US$26.5 billion) into the city’s stock market so far this year, including HK$20.3 billion on Wednesday, according to data compiled by Bloomberg. The net purchases, or southbound flow through the Stock Connect programme, 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, the strongest level since December 15.

Some technology stocks pared gains after a strong rally on Wednesday. Alibaba Group Holding, the owner of this newspaper, Meituan, and Xiaomi fell by more than 2 per cent. Tencent surged past HK$700 before easing to HK$689.50 for a 1.6 per cent gain.

China’s central bank on Wednesday announced 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 of the financial regulator’s plan to curtail market concentration in China’s $29 trillion e-payment market.

China Unicom lost 1.2 per cent, China Telecom declined 1.7 per cent, China Mobile was 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 of their US stocks to be retained.

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 0.7 per cent, after US equities mounted yet another new high overnight

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.

China stock alarm bells rebuffed as JPMorgan, BlackRock stay upbeat, market barometers remain a distance from 2015 crash triggers 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.

Traders have been positive about the outlook for global economic recovery led by China, said Li, as well as an expected improvement in US-China relations under the Biden administration. Without such optimism, “the shock to the Hong Kong market will be big,” he added.

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 almost tripled to 38.64 yuan. general Elevator more than tripled to 15.46 yuan.



Category: Hong Kong

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