Update | Hong Kong stocks climb as gain in Tencent outweighs net selling by mainland traders in exchange link
The Hang Seng Index rises 0.7 per cent for a second day as the gain in Tencent counters the first single-day net selling in southbound investment since August
Hong Kong stocks climbed for a second day on Tuesday, as the gain in Tencent Holdings countered the first single-day net selling in four months by mainland investors through the stock connect schemes between the city and mainland China.
The Hang Seng Index added 0.7 per cent, or 203.25 points, to 29,253.66 at the close, extending a rebound of the same magnitude a day earlier. The Hang Seng China Enterprises Index, known as the H-share gauge, advanced 1.1 per cent to 11,541.88. The mainland’s Shanghai Composite Index rebounded for a second day.
Strength from overnight trading in US equities also bolstered the sentiment on Hong Kong stocks. All three major US indices finished at all-time highs on Monday on growing expectations that the Republicans will succeed in passing the highly anticipated tax-cut bill in Congress this week. The Hang Seng Index is now just 2.6 per cent shy of its decade high of 30,003.49 reached last month.
“The momentum on Hong Kong stocks is gathering pace again,” said Wei Wei, a trader at Huaxi Securities in Shanghai. “It’s still a bull market and the uptrend is well on track.”
Tencent climbed 1.8 per cent to HK$401.20, contributing almost a quarter of the gain on the Hang Seng Index. The Chinese technology juggernaut announced on Monday that it would lead an US$863 million investment in Vipshop Holdings in a move seen as further rivalling Alibaba Group Holding in e-commerce.
Tencent would put in US$604 million for a 7 per cent stake, while e-commerce firm JD.com was investing US$259 million for a 5.5 per cent stake.
The partnership forged by Tencent and JD.com can create a synergy effect and diversify Tencent’s products, while in the longer term, also help it to gather more data about consumer behaviour for its development of “smart retail,” according to a Citigroup report. It will be a win situation for all the three parties involved, the note said.