HK and mainland markets rise as China’s economic growth in 2020 beats expectations

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

The Hong Kong and mainland markets rose at the midday break on Monday, on economic data from China that showed growth in the world’s second-largest economy had beaten expectations despite growing at its slowest pace in 45 years.

The Hang Seng Index rose 0.5 per cent to 28,712.79, extending its best start to the year in a decade. The Shanghai Composite Index also added 0.7 per cent.

China’s coronavirus-hit economy grew by 2.3 per cent in 2020, its lowest annual growth rate in 45 years, said the National Bureau of Statistics. However, the growth rate was higher than the 2.1 per cent expansion projected by a median forecast made by analysts surveyed by Bloomberg.

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The country was expected to be the only Group of 20 nation to report positive economic growth in 2020, even though its growth rate last year was the lowest since 1976, when China’s economy shrank by 1.6 per cent.

“Considering China’s growth potential in the global context, we think Chinese equities are, in aggregate, reasonably valued and in line with their long-term averages on a forward basis,” China Renaissance analysts led by Bruce Pang said in a note. “China is set to return to economic dynamism, with slow policy tapering. Consumption and innovation are two engines of growth in the new economy. We recommend increasing exposure to the new economy [sector] in the long run.”

New economy stocks, in fact, led the gains in Hong Kong on Monday, with the Hang Seng Tech Index of top technology companies rising 3.3 per cent. Smartphone lens maker Sunny Optical paced gains on the benchmark Hang Seng Index, rising 6.5 per cent, while power tools giant Techtronic Industries rose 5.1 per cent. Chinese mobile giants also rose, with China Unicom rising 4.6 per cent and China Mobile adding 4.8 per cent.

Chinese smartphone maker Xiaomi gained 2.9 per cent. It fell 10.3 per cent on Friday, after the United States defence department added the firm along with eight other companies to a military blacklist. The Trump administration also notified several Huawei Technologies suppliers, including chip maker Intel, that it was revoking certain licences to sell to the Chinese company and that it intended to reject dozens of other applications to supply the telecommunications firm, Reuters reported.

Meanwhile, Hong Kong’s finance chief warned in his blog on Sunday that unemployment in the city was expected to reach a record high when official figures this week reveal the full-year impact of the coronavirus pandemic. He forecast worse could be in store for the economy after the Lunar New Year holiday.

Three companies began trading on the Hong Kong and mainland exchanges on Monday.

Sundy Service Group, a property management company based in Hangzhou, the capital of Zhejiang province, fell on its trading debut on the Hong Kong stock exchange, dropping 22 per cent to 19.5 Hong Kong cents compared with its initial public offering (IPO) price of 25 Hong Kong cents.

In Shanghai, Tianneng Battery Group, which manufactures batteries for electric vehicles, rose 52.4 per cent from its IPO price of 41.79 yuan. Shanghai ZJ Bio-Tech, which manufactures molecular diagnostics, gained 74.6 per cent from its issue price of 43.22 yuan.

https://sg.news.yahoo.com/hong-kong-mainland-markets-rise-025104604.html

 

Category: Hong Kong

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