Hong Kong stocks rise to four-week high with earnings in focus as China dismisses Huarong distress
- China Mobile, China Unicom and Ping An Insurance will kick off first-quarter earnings reports from Hang Seng Index members from Tuesday
- Trip.com jumped on Hong Kong debut, markets in mainland China were steady after regulator dismissed distress at China Huarong Asset Management
The Hang Seng Index rose 0.5 per cent to 29,106.15 at the close of trading, the highest level since March 18. The gauge climbed 0.9 per cent last week after China reported an 18.3 per cent economic expansion last quarter, a major rebound from a pandemic-stricken period a year earlier.
The Shanghai Composite Index added 1.5 per cent. The China Banking and Insurance Regulatory Commission on late Friday calmed market concerns, saying that China Huarong Asset Management has ample liquidity to tackle its debt situation.
Traders are expected to shift their focus to corporate earnings from the macro front this week. China Mobile, China Unicom and Ping An Insurance Group will kick off the release of first-quarter earnings by the companies on the Hang Seng Index starting Tuesday.
The 55 constituents on the benchmark probably posted a 25 per cent increase in profits for the first three months of 2021, according to Bloomberg data, compared with a 30 per cent decrease a year earlier when the outbreak of Covid-19 triggered lockdown measures.
“The key to second-quarter allocation is to find stocks whose valuations can match earnings growth,” said Xue Jun, an analyst at Orient Securities. “Cyclical companies may fit the category. For consumer and health care stocks, their valuations are still at lofty levels and will need more time and earnings to digest.”
Sunny Optical Technology, Geely Automobile and Alibaba Health Information Technology led gainers in Hong Kong, rising at least 3.4 per cent. Alibaba Group Holding, the owner of this newspaper, and WH Group lost more than 1 per cent, among the worst performers.
Hangzhou Hikvision, China’s biggest maker of surveillance cameras, rallied 7.3 per cent to 61.21 yuan in Shenzhen after first-quarter profit increased 45 per cent from a year ago.
Major markets in Asia except Japan all gained on Monday, following the continuing run-up that sent US equities to an all-time high last week. Bond markets also got a relief after the assurance by China’s banking regulator about Huarong, after the bad-loan manager missed a bond payment.
Three debutants all surged on the mainland’s exchanges.
Suzhou Sonavox Electronics, a maker of automobile electronic products, jumped 317 per cent from the initial public offering price to 32.18 yuan as the best performer on Shanghai’s Star Market. Fujian Wanchen Biotechnology, which makes edible fungi products, and Dongguan Tarry Electronics, gained at least 38 per cent in Shenzhen.
