HK stocks on track for second week of gains as enthusiasm builds for coming blockbuster listings

06-Jun-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong stocks gained for a second straight week, showcasing a strong start for June amid excitement over the coming two blockbuster secondary listings of and NetEase as well as overall positive sentiment about economic recovery amid the coronavirus pandemic.

The Hang Seng Index closed 1.7 per cent higher at 24,770.41 on Friday, ending the week with a 7.9 per cent gain.

The city’s benchmark has struggled mightily this year, posting a monthly gain only in April. The benchmark has fallen nearly 14 per cent this year, largely due to the coronavirus pandemic and the havoc it caused, including disrupting global air travel and supply chains and leading to lockdowns that shut down non-essential businesses.

“Investors are balancing between economic reopening and political risks,” said Thomas Kwan, chief investment officer at Harvest Global Investments. “This week, political risks have cooled down, so investors’ attention went to economic reopening.”

The Shanghai Composite Index closed 0.4 per cent higher at 2,930.8. It advanced 2.8 per cent this week in its second straight week of gains.

In Hong Kong, property and finance sectors led the gains. Wuling Motors continued its run-up after reports it had sold more than 1,000 newly-launched trucks for street vendors, advancing another 28 per cent. Over the three sessions ending Friday, it soared 216 per cent.

Top blue chip gainers Hang Seng Bank rose 8.4 per cent, Swire Pacific advanced 6.2 per cent. Property companies also gained, New World Development rose 5.4 per cent, while Wharf REIC added 6.2 per cent.

Southbound capital into HSBC increased three days in a row, and the bank’s shares rose 4.3 per cent on Friday, the biggest one-day gain in 11 weeks, two days after the bank’s Asia-Pacific CEO Peter Wong signed a petition supporting China’s national security law for Hong Kong.

Hong Kong and China Gas, the city’s dominant piped gas supplier, closed 2.1 per cent higher. The company expects gas sales growth to return to “double-digit percentage” next year. Its Hong Kong gas sales volume to fall 2 to 3 per cent for the whole of this year, the management said. In mainland China which contributed over half its profit, gas sales volume for the full year is projected to grow 4 to 5 per cent, after falling 12 per cent in the first quarter.

Traders continued to shrug off uncertainties around political issues in the city. Thousands of people in Hong Kong defied a police ban amid Covid-19 and attended a Thursday night annual candlelight vigil marking the anniversary of the 1989 Tiananmen Square crackdown. The legislature body also passed a law to criminalise the mocking of China’s national anthem.

“China’s economy is recovering first and the fundamentals is the strongest among all economies, while the growth of stocks were not as big as those in other countries, so investment capital is flowing to mainland China and Hong Kong,” said Carl Cai, analyst at SPDB International.

Meanwhile, the Hong Kong Monetary Authority stepped in to keep the local currency below 7.7500 amid an influx of hot money ahead of several blockbuster initial public offerings in the city. NetEase and plan secondary listings.

Increased US-China tensions are also weighing on investor sentiment, as is the expectation that the US unemployment rate in May, which will be released on Friday, could soar to the highest level since the Great Depression.

“In the short term US President Trump may not have enough time to intensify tensions with China as domestic issues already are consuming his energy,” said Kwan.

Airlines saw gains in both Hong Kong and Shanghai, after the chair of China Eastern Airlines vowed to support for Hubei’s plan to build the province into a global centre of cargo and passenger aviation. The rallies followed big gains of US peers overnight as hopes build that airline travel is coming back after being hammered by the coronavirus.

Air China added 8.6 per cent in Hong Kong and 6.9 per cent in Shanghai. China Southern Airlines surged the daily cap of 10 per cent and 6.8 per cent on the mainland. China Eastern Airlines advanced 5.6 per cent in Hong Kong and 6.4 per cent in Shanghai. Hainan Airlines rose 2.5 per cent in its home listing.


Category: Hong Kong

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