HK traders set aside Donald Trump’s anti-China broadsides to buy stocks battered in Monday’s rout

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

Bargain hunters swooped back into Hong Kong’s stock market following Monday’s 1,000-point rout, willing to overlook US President Donald Trump’s increasingly angry rhetoric toward China to snap up shares of everything from local restaurant chains to Chinese major oil players.

Stocks got an extra boost late in the afternoon as city Chief Executive Carrie Lam Cheng Yuet-ngor eased social-distancing restrictions on restaurants, and said highly popular mahjong parlours, beauty shops and fitness centres will be allowed to reopen. She took the steps as Tuesday marked the 10th time in the past 16 days that there have been no new infection cases due to the coronavirus.

The Hang Seng Index ended the day 1.1 per cent higher at 23,868.66. It fell 4.2 per cent on Monday.

China’s stock markets will reopen Wednesday after four sessions of holidays.

Hong Kong’s benchmark is in a bear market after the coronavirus outbreak sent stocks into a tailspin. While it has clawed its way partly out, it is still down more than 15 per cent this year.

“Market sentiment is still good, but there’s uncertainty on the US-China relationship,” said Alan Li, portfolio manager at Atta Capital. “The HSI sees a strong support at 23,500. But upside potential is limited due to very low visibility on the possible action of Trump’s government against China.”

The respiratory ailment, which began in mainland China, has triggered the worst global recession since the Great Depression, rocking global stock markets and leading to about half of the world’s population at one point under lockdown. The pandemic has led to nearly 3.6 million infections and more than 251,000 deaths, with the US being dealt the severest blow, with about 69,000 deaths reported already. The pandemic has sparked a scramble by pharmaceutical companies to come up with treatments and vaccines.

Meanwhile, Trump, who faces a difficult re-election bid in November, has ratcheted up his anti-China rhetoric, warning he may resume tariffs and musing that China may have intentionally let the coronavirus spread so it wasn’t alone in experience economic damage.

In other parts of the Asia-Pacific region, stocks rose.

In Australia, which is battling its worst recession in decades, the S&P/ASX 200 gained 1.6 per cent. The country will take a A$50 billion (US$32 billion) hit in the June quarter due to the coronavirus lockdown, Treasurer Josh Frydenberg said on Tuesday in an address at the National Press Club in Canberra. He added that the world’s 12th-biggest economy will lose about A$4 billion (US$2.6 billion) every week due to the shutdown.

New Zealand’s S&P/NZX 450 Gross Index rose 0.1 per cent.

Australia and New Zealand agreed to work on opening their borders to create a trans-Tasman Covid-safe travel zone after easing current lockdown restrictions, prime ministers Scott Morrison and Jacinda Ardern said in a joint statement on Tuesday. But both leaders said resumption of international travel would be introduced with great caution to prevent further outbreaks in either country.

Singapore’s Straits Times Index increased 0.7 per cent.

South Korea and Japan’s markets were closed Tuesday for the Children’s Day holiday. South Korea reopens Wednesday, but Japan’s markets are shut until Thursday.

In Hong Kong, the top turnover stocks were Alibaba, the e-commerce giant and owner of the South China Morning Post, which fell 0.6 per cent, and Tencent, the social media and games titan, which gained 1.5 per cent.

Tencent got a boost from HSBC, which reiterated its “buy” rating on the stock and raised its 12-month target price to HK$511 from HK$548 or a 35 per cent increase from the Tuesday close.

Top blue chip gainers included power tools giant Techtronic Industries, which soared 8.9 per cent, mainland garment maker Shenzhou International, which jumped 4.5 per cent, and Geely Auto, which shot up 4.8 per cent after getting a “buy” rating from Citigroup.

Cafe De Coral surged 6.6 per cent on the easing steps, while Fairwood, one of its fast-food chain rivals, shot up 3.6 per cent.

Meanwhile, in another sign of confidence in Hong Kong as a global financial hub, Chinese gaming and streaming music giant NetEase filed confidentially for a second listing in Hong Kong, Bloomberg reported Tuesday.

Chinese oil companies, which were hammered Monday in part due to ongoing turmoil in oil markets because of a supply glut, rose, with China National Offshore Oil Corporation, also known as CNOOC, advancing 2.9 per cent.

The company would join Alibaba, the e-commerce giant and parent company of the South China Post, in offering its shares closer to home. JD.com, another e-commerce giant with a US listing, also plans to offer its shares in Hong Kong, sources told the SCMP last week.

Such moves come as the city struggles in a recession unleashed by the US-China trade war, months of anti-government protests as well as the ongoing coronavirus pandemic.

It is expected that such Chinese stocks will eventually trade on the link between Hong Kong and the mainland, allowing mainland Chinese traders to own some of the most popular home-grown companies.

 


Category: Hong Kong

Print This Post