HK’s Hang Seng Index rises after two straight weeks of gains, even as traders face coronavirus jitters

14-Jul-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong stocks advanced at the start of the new week, as traders shook off an early morning bout of jitters over rising coronavirus cases and the prospect of a slower pace of economic recovery in the US.

The Hang Seng Index found its footing to gain 1.2 per cent as of 2:08pm to 26,031.31, with commerce and industry stocks leading gains and property stocks retreating.

High turnover stocks were Tencent, China’s social media and online gaming giant, which turned up to advance by 1.2 per cent to HK$553, and Alibaba, the country’s e-commerce titan and the owner of the South China Morning Post, which rose 0.5 per cent to HK$256.80.

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Daiwa Capital Markets reiterated its buy on Alibaba and boosted the 12-month target price to HK$294 from HK$260, or a 15.1 per cent jump from Friday’s close. Analyst John Choi said he expects Alibaba will post a “solid” quarter, with its revenue growing 30 per cent year-on-year when it reports next month.

Meanwhile, China automakers soared in Hong Kong, as data shows car sales continue to recover in June in the world’s largest car market after the coronavirus.

Geely Automobile shot up 9 per cent, while BYD jumped 13.5 per cent to HK$87.70.

On the mainland, the Shanghai Composite Index also struggled initially for direction, but gained 1.9 per cent to 3,426.21 after the lunch break. Concern is growing over whether China stocks have risen too much and too quickly, raising the spectre of the 2015 meltdown in mainland markets fuelled by irrational exuberance and margin trading.

A commentary published by state-owned Securities Times cautioned investors against chasing the rally as market sentiment has turned into a bullish mood.

It urged individual investors to focus on companies’ fundamentals, adding that only those firms with solid earnings were good buys.

“It is not a bull market yet unless the Shanghai Composite Index breaks through the 3,500-point level,” said Zhou Ling, a fund manager with Shanghai Shiva Investment. “It is important for the official media organisations to play down investors’ expectations for a strong rally at this moment.”

Kweichow Moutai, one of the most popular stocks traded on the Hong Kong-mainland Stock Connect, advanced 4 per cent to 1,779.89 yuan.

In the Asia-Pacific region, Tokyo’s Nikkei 225 advanced 2 per cent, Korea’s Kospi climbed 1.7 per cent, while Australia’s S&P/ASX 200 rose 1 per cent.

US stock futures rose.

Investors in Hong Kong began the second week of the newborn bull market, as mainland money has poured in and a total of 24 initial public offerings are slated for this month. Sentiment overall remains positive, with the Hang Seng Index seeing back-to-back weekly gains and on track for a monthly gain.

A cloudy earnings season kicks off in the US this week, while in Hong Kong, Covid-19 cases surged and a primary election over the weekend for democratic opposition candidates for the Legislative Council was swamped with hundreds of thousands of voters at a time when Beijing is tightening its grip over the city.

Meanwhile, China will release its latest data on second-quarter GDP, retail sales, unemployment and industrial production.

Gold rose 0.4 per cent to $1,805.21. Gold-backed exchange trader funds posted their seventh month of positive flows in June as the asset haven trades at levels not seen since 2011.

Meanwhile, US President Donald Trump, whose re-election bid looks increasingly in danger, signalled he is not in a rush for a phase two trade deal with China, the latest sign of souring relations between the world’s two largest economies, which he described as “severely damaged”.

Two Hong Kong property stocks were top losers in the sector, which continues to be weighed down by uncertainties around property buying and retail sales in malls, even as analysts rate a number of them as buys with possible significant upside. New World Development fell 1.7 per cent to HK$40, while Wharf REIC fell 1.4 per cent to HK$32.75.

Also, two stocks debuted in the city.

Yik Wo, which makes disposable plastic containers, jumped 105 per cent to 82HK cents on the GEM baord.

Honliv Heathcare Management Group, which operates one of the largest for-profit hospitals in China, gained 16.7 per cent to HK$2.45 in its debut on the main board.

On the mainland, two companies debuted.

Sihui Fuji Electronic Technology, which makes printed circuit board products, opened 20 per cent higher, trading at 39.67 yuan.

The company listed on the ChiNext market soon surged to the 44 per cent first-day upper limit, hitting 47.60 yuan with 30-minute trading suspension triggered.

Bearings manufacturer Luoyang Xinqianglian Slewing Bearing jumped 20 per cent to 23.59 yuan when trading started before climbing further to 26.41 yuan, 34.3 per cent higher than its IPO price.


Category: Hong Kong

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