HK stocks see-saw in early trading but investors fret this week’s rally could be ending

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

Hong Kong stocks are on track for a second week of gains, with June kicking off strongly 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 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.

Now traders are also facing growing US-China tensions as well as fears of new outbreaks of the coronavirus.

Hong Kong stocks see-sawed in early trading Friday, but the Hang Seng Index rose 0.2 per cent as pf 1:20pm local time.

The Shanghai Composite Index also fluctuated between small gains and losses, and was recently down 0.3 per cent.

In Hong Kong, property and finance sectors rose, while utilities and commerce and industry stocks declined.

High-flying 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. On Wednesday and Thursday, it soared a total of about 150 per cent.

Top blue chip gainers were Hang Seng Bank, which gained 3.8 per cent, and Swire Pacific, which advanced 3.3 per cent.

Other property stocks gained as well Sun Hung Kai Properties rose 3 per cent, while Wharf REIC advanced 2.2 per cent.

The gains came as Daiwa Capital Markets reaffirmed its “positive” outlook on Hong Kong property, despite rising US-China tensions and Beijing’s move to impose a national security law on the city.

“Investors are buying companies, not the environment those companies are operating under,” Daiwai Capital analyst Jonas Kan wrote. “Investors should not lose sight of the fact that most Hong Kong property companies have very strong balance sheets and have continued over the years to strengthen their recurrent incomes.”

Many of the property stocks offer dividends of more than 5 per cent, Kan pointed out.

Mengniu Dairy was leading losses among blue chips, falling 2.2 per cent. Index heavyweight Tencent fell 1.2 per cent.

Traders are facing 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.

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.

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 8.2 per cent in Hong Kong and 5.4 per cent in Shanghai. China Southern Airlines surged 8.4 per cent and 5.3 per cent on the mainland. China Eastern Airlines advanced 5.2 per cent in Hong Kong and 6.2 per cent in Shanghai. Hainan Airlines rose 2.5 per cent in its home listing.


Category: Hong Kong

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