HK stocks rise to eight-month high in late charge amid Covid-19 woes with market valuation at decade-high

26-Nov-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong stocks rose to an eight-month high in a late rally as the progress from a third vaccine candidate this month offset concerns about a surge in local Covid-19 cases.

The Hang Seng Index added 0.4 per cent to 26,588.20 at the close, the highest since March 5. The 50-members in the index now traded at 14.6 times earnings on average, the most expensive in a decade, according to Bloomberg data. The Shanghai Composite Index slipped 0.3 per cent to 3,402.82.

Alibaba Group Holding rose for a third day on a local media speculation that more Hong Kong-listed companies will be added to the Stock Connect, a cross-border investment channel linking the city and the mainland. Chinese smartphone maker Xiaomi retreated from its record high before an earnings report.

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The increase in Hong Kong stocks dovetailed with a bullish trend in other major Asian markets, where Japan’s Nikkei 225 rose 2.5 per cent and Australia’s S&P/ASX 200 jumped 1.3 per cent. They rallied in tandem with overnight gains in US equities.

Underpinning the sentiment was the success of the vaccine developed by AstraZeneca and the University of Oxford, which can prevent as much as 90 per cent of infection. That was close to the data from the other two candidate vaccines by Pfiser and Moderna. “Before the real risk on rotation party starts, the workability of mass vaccinations must be overcome,” said Stephen Innes, a strategist at Axi. “The most subjugated sectors dependent on human interaction will rebound dramatically.”

Still, Hong Kong is racing against the clock to contain a “super-spreader” coronavirus cluster from dance clubs, as authorities seek to trace up to 1,000 people. The government on Monday confirmed 73 new infections, the most in three months.

The city will close more entertainment venues, chief executive Carrie Lam Cheng Yuet-ngor said at a weekly briefing on Tuesday, without elaborating. The government on Monday confirmed 73 new infections, the most in three months.

Alibaba, the owner of the South China Morning Post, gained 2.3 per cent to HK$270., which rivals Alibaba in e-commerce, added 1 per cent to HK$348.20. Gaming company NetEase advanced 1.6 per cent to HK$150.80.

Hong Kong plans to expand the list of stocks available for trading by mainland investors and the move is expected to be unveiled by Lam in her policy address on Wednesday, Sing Tao reported, citing unnamed sources. Currently, companies with secondary listings and dual-share class structures are barred from the Stock Connect.

Hong Kong Exchanges and Clearing, the local bourse operator, rallied 4 per cent to HK$392 on expectations that it will benefit from increased trading volumes.

Xiaomi, China’s biggest smartphone maker, slipped 1.6 per cent to HK$27.15 before its quarterly earnings report later Tuesday. Third-quarter profit probably dropped 4.7 per cent from a year earlier, according to the estimates of analysts polled by Bloomberg. The stock rose to a record close a day earlier.

In the mainland, Zhejiang Supcon Technology, a maker of industrial automation control products, surged 204 per cent from its initial public offering price to 108.63 yuan on the Star Market in Shanghai.


Category: Hong Kong

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