Hong Kong stocks leap in catch-up trade after China’s manufacturing rebound; Xiaomi surges on strong EV orders

China’s PMI manufacturing index rose to 50.8 in March from 49.1 in February, above market consensus estimates, ending five months of contraction in factory activity
Chinese smartphone and gadget maker Xiaomi reported solid orders after its foray into the world’s biggest electric vehicles market

Hong Kong stock market

Jiaxing Li

Published: 10:43am, 2 Apr 2024

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Hong Kong stocks jumped by the most in three weeks as trading resumed after a 4-day break, with investor sentiment lifted by a manufacturing rebound in the world’s second biggest economy and as Chinese smartphone and gadget maker Xiaomi reported solid orders on its debut in the world’s biggest electric vehicles (EV) market.

The Hang Seng Index advanced 2.4 per cent to 16,931.52 at the closing of Tuesday trading, its highest level since March 13. The Tech Index strengthened 1.9 per cent but the Shanghai Composite Index declined 0.1 per cent, surrendering earlier gains.

Smartphone maker Xiaomi surged 9 per cent to HK$16.28, the highest level since December 27, after reporting last Thursday its first EV model received strong orders.

Online travel agency Trip.com gained 9.2 per cent to HK$377, a record high, after analysts at Citigroup bumped up the price target on the improving travel outlook. Bank of China (Hong Kong) rallied 9.6 per cent to HK$22.95 and Hang Seng Bank advanced 5.3 per cent to HK$90.15, leading gains among lenders.

China’s official PMI manufacturing index rose to 50.8 in March from 49.1 in February, the statistics bureau said on Sunday. The reading surpassed market consensus of 50.1 and ended five months of contraction in factory activity. A separate report by Caixin/S&P Global on Monday showed the manufacturing index rose to 51.1 in March, beating analysts’ forecasts.

“Looking ahead to the second and third quarters, there are numerous positive developments taking place in China,” Wang Jingjing, analyst at independent research firm Horizon Insights said in a note. Hong Kong stocks, especially internet companies with solid earnings, could benefit most if foreign funds look to add China exposure, they added.

Today’s gains comes on the back of a 3 per cent decline in the Hang Seng Index during the first quarter, which followed an unprecedented four years of losses as investors worried about lacklustre corporate earnings and China’s bumpy economic recovery. The benchmark now trades at 8.76 times forward earnings, the cheapest among global major indexes, according to Bloomberg data.

Elsewhere, Longfor tumbled 1.4 per cent to HK$10.90, leading losses among developers, after a report showed prices of second-hand homes across 100 mainland cities fell 4.8 per cent to per square metre on average in March from a year earlier.

Delton Technology Guangzhou, a circuit board producer, surged 198 per cent from its IPO price to 51.88 yuan per share on its first day of trading in Shenzhen.

Other key Asian markets were broadly higher ahead of US employment and wage data later this week. Japan’s Nikkei 225 added 0.1 per cent and South Korea’s Kospi added 0.2 per cent. Australia’s S&P/ASX 200 Index lost 0.1 per cent.