Chinese stocks regain US$1.7 trillion of value in November rally as Covid pivot, stimulus bets gain momentum
- The Hang Seng Index rose 27 per cent in November, the most since October 1998, with HSBC, Xpeng and developers powering the rally
- China’s zero-Covid ‘has passed the point of no return’, Alpine Macro says, as Beijing seen abandoning policy by choice or by force
The Hang Seng Index rose 2.2 per cent to 18,597.23 at the close on Wednesday. The gauge soared 27 per cent in November, capping the biggest monthly gain since October 1998. The Tech Index rallied 2.8 per cent, while the Shanghai Composite Index completed an 8.9 per cent gain for the month.
“The rebound still has momentum because we have seen some good developments in the property market and efforts to boost the vaccination rate,” said Zheng Xiaoxia, an analyst at Hua An Securities. “The market’s expectations about economic growth have been improving.”
Hong Kong’s stock market recouped US$808 billion in value in November through Tuesday, after Beijing eased some pandemic restrictions and unveiled measures to bail out cash-strapped developers. China’s onshore market recovered US$909 billion of capitalisation in the same period, according to Bloomberg data.
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HSBC also said it was “proactively” considering a one-time dividend or fresh stock buy-back. The London-headquartered lender’s dividend payout is an important focus for Hong Kong’s retail base, which historically has owned a large chunk of the bank.
“Certainly, we welcome they may consider to have a special dividend,” said Christine Fong Kwok-shan, a councillor for Hong Kong’s Sai Kung district, who has previously led local investors in trying to make claims against the lender for not paying dividends. The lender halted dividend payments in 2020 at the request of UK regulators.
“We have to remind HSBC that they should count the last time they revoked the dividend issue, they should add it up and reissue the dividend to us again,” Fong said.
Property developers were the biggest winners in November. Country Garden jumped 198 per cent, while its affiliated property-management firm Country Garden Services surged 179 per cent. Longfor Group climbed 136 per cent. China this month unveiled a 16-point plan to rescue cash-strapped builders, end equity financing freeze and unleash more liquidity in the banking system to spur lending.
Time to be China stock bulls as zero-Covid ‘has passed point of no return’
Daily infections remained elevated across the country, with 37,612 new cases on Tuesday. China’s top security body pledged to crack down on “hostile forces” after street protests against lockdowns broke out in mainland cities including Shanghai and Beijing over the weekend.
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Meanwhile, traders bet policymakers in Beijing will step up on recent stimulus efforts, after a statistics bureau report showed a slump in manufacturing deepened in November. The purchasing managers’ index fell to 48 from 49.2 in October, versus market consensus of 49. A reading below 50 indicates contraction.
Benchmarks tracking Chinese stocks in offshore and onshore markets are still in the red this year. The Hang Seng Index has retreated 21 per cent while the Shanghai Composite lost 13 per cent.
Two companies started trading in Shenzhen. KSEC Intelligent Technology, which develops logistics automation systems, jumped 44 per cent to 20.01 yuan and Jiangsu Canopus Wisdom Medical Technology, a medical equipment maker, advanced 20 per cent to 53.12 yuan.
Elsewhere, trading in other major Asian markets was mixed following overnight losses in US equities. Japan’s Nikkei 225 slipped 0.2 per cent, while South Korea’s Kospi rose 1.6 per cent and Australia’s S&P/ASX 200 added 0.4 per cent.
Additional reporting by Bloomberg
