HK, China stocks fluctuate as funds look to buy the dip amid valuation angst, bond market scare

10-Mar-2021 Intellasia | South China Morning Post | 5:02 AM Print This Post

Hong Kong and China stocks swung between gains and losses as investors weighed lingering concerns about valuations and a bond market sell-off against prospects of a global economic recovery.

The Shanghai Composite slipped 0.2 per cent to 3,415.23 at local noon break, paring a slide of 2.7 per cent. It logged a 2.3 per cent drop on Monday in theindex’s biggest pullback since July 24. A fourth day of decline today would represent the index’s longest retreat since mid-November.

The CSI 300 Index, which tracks some of the biggest stocks in Shanghai and Shenzhen, was little changed after falling as much as 3.2 per cent. In Shenzhen, the tech-heavy ChiNext Index shed 0.2 per cent, paring a 4.4 per cent setback.

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The Hang Seng Index traded 1.4 per cent higher, reversing from losses of as much 0.8 per cent. The gauge slumped 1.9 per cent on Monday. The market last experienced a four-day slide in late January.

“In periods like thesewhen the market is fearful in the near-term, but economic trends look positiveI believe it’s time to look for buying opportunities,” said Kristina Hooper, chief global market strategist at Invesco.

“I believe this is not a time to abandon stocks, but to understand which sectors and areas of the market could be poised to benefit,” she added in a report to clients. “Those sectors that are most cyclically sensitive should be expected to outperform.”

Kweichow Moutai, the world’s most valuable distiller, gained 1.5 per cent to 1.989.79 yuan in Shanghai, after tumbling 4.9 per cent on Monday.

In Hong Kong, power tools maker Techtronic Industries paced gainers among blue chips with an 8.5 per cent surge to HK$122.80. The Hang Seng Tech Index gained 2 per cent, after sinking as much as 4.6 per cent, trimming its correction to about 24 per cent from its record-high on February 17.

The Hang Seng Index has dropped around 7 per cent from its peak in February 17, while the Hang Seng Tech Index has retreated nearly 2.5 per cent. The ChiNext has plunged more than 20 per cent from its peak in February 10, while the Shanghai Composite has dropped 7.6 per cent from its peak in February 19.

Markets in Asia-Pacific were mixed. Japan’s Nikkei 225 edged up gained 0.9 per cent, while South Korea’s Kospi dropped 0.7 per cent. Australia’s S&P/ASX 200 added 0.6 per cent.

Signs of economic rebound has fanned a sell-off in US Treasuries as benchmark 10-year yield spiked recently to about 1.6 per cent amid concerns policymakers will dial back extraordinary monetary stimulus.

Treasury Secretary Janet Yellen said the $1.9 trillion Covid-19 relief package would provide resources to “fuel a very strong economic recovery” and help the US return to full employment.

“When there is a significant rise in the 10-year yield, especially quickly, it can often cause a re-rating of stocks,” Hooper at Invesco said. “This is what we should expect when economic growth prospects improve, raising concerns about inflation as well.”

Two companies debuted in China today.

Hainan Jinpan Smart Technology, which manufactures electrical components, gained 149 per cent from its 10.10 yuan offer price, while Shenzhen Sking Intelligent Equipment rose 204 per cent from 16.49 yuan.


Category: Hong Kong

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