Tencent, NetEase keep Hong Kong stocks at 6-month high as China reopening bets show fatigue before Lunar holiday
- The Hang Seng Index has risen almost 50 per cent from end-October, pushing the benchmark and market leaders into overbought zone
- Traders are expected to trim their holdings before markets pause for the Lunar New Year break next week
The Hang Seng Index closed 0.5 per cent stronger at 21,678 on Wednesday, reversing a loss of as much as 0.7 per cent. The Tech Index added 0.5 per cent while the Shanghai Composite Index was little changed.
NetEase rallied 6.5 per cent to HK$142.30 while Tencent advanced 1.7 per cent to HK$380. Their titles were among 88 video games approved by Chinese authorities this month, in line with recent official statements signalling the end of the tech-sector clampdown.
Tempering the gains, JD.com lost 1.8 per cent to HK$235.40 while rival e-commerce operator Alibaba Group slipped 0.4 per cent to HK$114.10. Baidu tumbled 2.7 per cent to HK$128.60 and electric-vehicle maker Xpeng slumped 2.9 per cent to HK$36.40 amid a price war with Tesla.
“We are positive on the digital-economy sector given its importance, while valuations are still near the bottom,” said Wu Peiwen, a fund manager at HSBC Jintrust Fund Management in Shanghai. “China has placed the revival of consumption as a priority.”
Still, markets on both sides of the border appear to be exhausted after gaining US$800 billion of capitalisation this year. The Hang Seng Index and some market leaders reached overbought levels this week, signalling an imminent reversal.
The local market will shut for three days next week, while mainland bourses will close for the entire week for the Lunar New Year.
China approves 88 licences for video games in January, easing pressure
Vice-Premier Liu He said at the World Economic Forum in Davos that China’s economic growth will stay on track after the reopening measures, and reassured investors that the nation would stick to the market-based system. Growth cooled last quarter, the government said on Tuesday.
Two companies started trading on Wednesday. Suzhou Ovodan Foods jumped 70 per cent to 4.24 yuan in Beijing, while Beijing Jiuzhouyigui Environmental Technology gained 23 per cent to 21.56 yuan in Shanghai.
Other major Asian markets were mixed. Japan’s Nikkei 225 jumped 2.5 per cent and Australia’s S&P/ASX 200 added 0.1 per cent, while South Korea’s Kospi retreated 0.5 per cent.
