Hong Kong stocks extend rally to two weeks on Tencent, Alibaba gains as China pledges steady growth with reopening push

Premier Li Keqiang says China is aiming for steady growth next year amid measures to reopen the economy
Daily Covid-19 cases have eased to about 21,000 nationwide, from all-time high of more than 40,000 last month

Hong Kong stock market

Jiaxing Li

Published: 10:28am, 9 Dec, 2022

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Hong Kong stocks advanced, chalking up a second week of gains, after China vowed to achieve steady economic growth next year following measures to ease its zero-Covid regiment. A report on slower inflation was also seen aiding policy easing momentum.

The Hang Seng Index rose 2.3 per cent to 19,900.87 at the close of Friday trading, adding to a 3.4 per cent rally on Thursday and rising by 6.6 per cent for the week. The Tech Index climbed 2.3 per cent on Friday, while the Shanghai Composite Index added 0.3 per cent.

Tencent Holdings gained 2.6 per cent to HK$325.60, Alibaba Group gained 2.7 per cent to HK$91.85, and Meituan jumped 5.7 per cent to HK$188.50. Developer Country Garden surged 8.5 per cent to HK$3.06, Sun Hung Kai rose 4.3 per cent to HK$102.50 and New World Development gained 6.7 per cent to HK$22.25. China’s Tesla challengers Nio and Xpeng added 3.7 to 4 per cent.

Premier Li Keqiang pledged to achieve steady growth in 2023, after meeting the heads of the World Bank, World Trade Organization and International Monetary Fund on Thursday. “China has stabilised employment, price levels and also kept growth in a reasonable range,” state broadcaster CCTV cited Li as saying.

“Sentiment continued to recover over the latest Covid policy,” analysts at Morgan Stanley including Laura Wang said in a note on Friday. “With a set reopening path, we believe Chinese equities will outperform global markets.”

The Hang Seng Index’s 6.6 per cent rally over the past five days adds to a 6.3 per cent gain in the preceding week, helping the broader Hong Kong stock market recoup more than US$1 trillion of value since the benchmark recovered from its October low on China reopening bets.

Is zero-Covid pivot making Chinese stocks an easy one-way bet for 2023?

“It’s still good level for allocations by long-term funds, as we have better expectations for the economy and attractive valuations,” HSBC Jintrust Fund Management said in its latest monthly newsletter to clients.

China reported 16,592 of daily Covid-19 infections nationwide on Friday from 21,165 a day earlier, according to data released by the National Health Commission. Cases surged past 40,000 levels late last month, a record since the Wuhan outbreak in early 2020.

Meanwhile, inflation slowed further in China, a government report on Friday showed. Consumer prices rose 1.6 per cent in November from a year earlier, versus 2.1 per cent increase in October. Producer price index fell 1.3 per cent, matching the drop in October, as Covid-19 curbs weighed on factory activity.

03:27

China further eases pandemic restrictions in latest step towards reopening after zero-Covid

Five stocks debuted on Friday. Sunshine Insurance was flat with share price standing at HK$5.83 in Hong Kong after selling new shares at the bottom of the IPO price range. Changzhou Fusion New Material jumped 35.8 per cent and Tianjin Meiteng Technology added 1.9 per cent in Shanghai, while Chengdu Okay Pharmaceutical and Lucheng Technology Group dropped by 5.3 to 10.6 per cent in Beijing.

Elsewhere, Asian stocks jumped after US shares posted their first winning day in December. Benchmark indexes in Japan, South Korea and Australia rose by 0.5 to 1.2 per cent on Friday.

With additional reporting by Zhang Shidong.

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