Hong Kong stocks reach six-week high with gains in Meituan, Alibaba as Shanghai prepares to exit lockdown

Stocks added to Friday’s rally on corporate earnings support as Meituan prepares to report its quarterly results on June 2

Shanghai unveiled a 50-point plan to reopen and repair the city’s economy after two months of lockdown, fuelling optimism on recovery outlook

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A man walks past an electronic screen showing the Hang Seng Index in Central, Hong Kong on May 27. Photo: AFP

Published: 10:48am, 30 May 2022Updated: 1:05pm, 31 May 2022

Hong Kong stocks climbed to a six-week high after Shanghai unveiled a 50-point plan to exit from a citywide lockdown as Covid-19 cases fell, fuelling recovery hopes. Meituan jumped before its earnings report this week.

The Hang Seng Index gained 2.1 per cent to 21,123.93 at the close of Monday trading, the highest level since April 14. The Tech Index surged 3.9 per cent. The gains helped erase the loss this month in the main index, and reduce the tech slide to 2.7 per cent. Stocks in Shanghai added 0.6 per cent.

Alibaba Group Holding soared 4.3 per cent to HK$94.40, taking the rebound to 17 per cent in two days. Meituan rallied 6.8 per cent to HK$175.10, even as analysts forecast the food-delivery platform operator to report a wider net loss in the quarter to March 31. Li Ning and Haidilao rallied 9 to 11 per cent.

The Shanghai government on Sunday announced key steps to repair its US$637 billion economy as officials get ready to gradually end the citywide lockdown from June 1. They included scrapping approvals for factory production, cash subsidy for car purchases, grace period for tax payments and spending coupons to boost consumption.

“With production resumption in Shanghai proceeding steadily, we expect widespread supply chain disruptions to ease in the coming month,” said Meng Lei, a strategist at UBS in Shanghai. “Given the recent increase in policy support and the relatively loose macro liquidity conditions, we believe market valuation has bottomed.”

Shanghai’s lockdown since April 1 has stoked debates about China’s stop-start economy, forcing some investors to dump Chinese stocks on concerns about corporate earnings outlook. Profits at China’s industrial firms fell 8.5 per cent in April from a year earlier, swinging from a 12.2 per cent gain in March.