JD.com, Alibaba, Meituan extend Hang Seng Index rebound from 13-year low, with sentiment aided by a rally in US-listed Chinese companies

Hang Seng Index closes 0.7 per cent higher led by gains in Chinese tech giants
Nasdaq Golden Dragon China Index advanced for a second day, almost erasing the record 14 per cent plunge on Monday

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 10:18am, 27 Oct, 2022

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Hong Kong stocks extended a rebound from a 13-year low, with a rally in Chinese companies trading in the US aiding sentiment. Some investors are setting up new funds to buy the dip.

The Hang Seng Index advanced 0.7 per cent to 15,427.94 at the close, adding to the 1 per cent gain a day earlier. The Hang Seng Tech Index jumped 1.1 per cent, while the Shanghai Composite Index slipped 0.6 per cent.

The Nasdaq Golden Dragon China Index surged 7.2 per cent overnight, bringing its two-day rebound to 12 per cent that almost erased a record 14 per cent drop on Monday, as traders digested the fallout of China’s top leadership reshuffle.

About half of the 73 members on the Hang Seng Index advanced, with technology stocks pacing the gains. JD.com jumped 5.9 per cent to HK$157.10 and Alibaba Group Holding surged 4.1 per cent to HK$64.85. Meituan climbed 1.6 per cent to HK$131.80 and Tencent Holdings rose 0.8 per cent to HK$213.20. Chinese chip maker Semiconductor Manufacturing International Corp climbed 3.6 per cent to HK$16.64.

In the latest sign of investors taking advantage of stocks’ battered valuation, Fung Capital, the private investment office of Hong Kong’s Fung Group, and BOCHK Asset Management, a unit of one of the city’s biggest currency-issuing banks, are seeking to launch two funds that will invest in Chinese stocks.

The stock market tumult would prove to be an aberration as China’s economy continued to recover and top leaders were committed to further opening-up and market reforms, Laura Cha Shi May-lung, chairwoman of Hong Kong Exchanges and Clearing, said at a conference in Saudi Arabia on Wednesday.

Zhang Kun, China’s star money manager at E Fund Management, said in his fund’s latest quarterly report that values had emerged and advised investors to be patient for a turnaround in stocks.

“Equities’ risk premium may have already peaked and there’s a limited downside risk at this level,” said Dai Kang, an analyst at GF Securities. “Corporate earnings may bottom out in the third quarter and the policy tightening in the US may also ease going forward amid rising expectations about the recession.”

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Hong Kong stocks suffered from an epic sell-off on Monday after the Chinese Communist Party wrapped up its national congress, which heightened concerns that President Xi Jinping’s further consolidation of power within the party would make it easier for Beijing to implement policies unpopular among investors, including zero-Covid and crackdown on the private sector.

Expectations about strong corporate earnings also helped to fuel buying interest. Budweiser Brewing rallied 6.8 per cent to HK$17.94 after saying profit increased 8.7 per cent from a year earlier in the first nine months. ZTE, China’s biggest publicly traded maker of telecoms equipment, and Wuxi Apptec, an affiliate of Hang Seng Index constituent Wuxi Biologics, also both reported higher third-quarter net income.

Twelve companies on the Hang Seng gauge including BYD and ICBC are expected to release quarterly results in the following week.

On the mainland, Foshan Haitian Flavouring and Food retreated 5 per cent to 64.46 yuan after the nation’s biggest maker of soy sauces posted a 6 per cent year-on-year decline in the third quarter, the first drop for the July-to-September period since its listing in 2014.

Zhejiang YGM Technology, a manufacturer of reflective materials, was unchanged at 10.99 yuan on the first day of trading on the Beijing Stock Exchange.

Most of major markets in Asia rose as traders bet that the Federal Reserve will taper the pace of raising interest rates.

South Korea’s Kospi and Taiwan’s Taiex rose more than 1 per cent, while Australia’s S&P/ASX 200 added 0.5 per cent. Japan’s Nikkei 225 was the only decliner, falling 0.3 per cent.