Hong Kong stocks rebound as mainland funds buy, Baidu surges on ChatGPT rivalry while Goldman trims US recession odds

Mainland Chinese investors were net buyers of Hong Kong stocks for a second day to take advantage of market slip-up

Goldman Sachs lowered the odds of US entering a recession in the next 12 months, citing China’s faster growth as one of the reasons

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An electronic billboard displaying the Hang Seng Index figure outside the Exchange Square in Central, Hong Kong in October 2022. Photo: Yik Yeung-man

Published: 10:30am, 7 Feb 2023Updated: 4:45pm, 7 Feb 2023

Hong Kong stocks rose after mainland Chinese funds returned to the local market to take advantage of a three-day slump, while Goldman Sachs lowered the odds of recession in the US before Federal Reserve Chair Jerome Powell speaks later today.

The Hang Seng Index climbed 0.4 per cent to 21,298.70 at the close of Monday trading. The Tech Index added 1.2 per cent and the Shanghai Composite Index gained 0.3 per cent. The city’s benchmark had retreated by almost 4 per cent in the preceding three days as China reopening bets waned.

Alibaba Group advanced 1.7 per cent to HK$105, while Tencent Holdings added 1.1 per cent to HK$381 and oil explorer CNOOC jumped 2.3 per cent to HK$11.42. Longfor Group gained 1.2 per cent to HK$24.55, and WuXi Biologics added 1.7 per cent to HK$64.60.

China’s top search engine operator Baidu surged 15.6 per cent to HK$162.90 following reports saying it would complete internal testing and launch “Ernie Bot” in March, an app to rival ChatGPT, a popular AI-aided app with humanlike responses.

Mainland Chinese funds were net buyers of HK$16 million (US$2 million) worth of Hong Kong-listed shares on Tuesday, adding to a haul of HK$1.99 billion (US$255 million) on Monday, according to Stock Connect data. Both rounds of purchases ended a bout of selling when they returned to trading on January 30 after the Lunar holiday.

“The sentiment is quite positive due to signs of economic recovery in China,” said Kenny Wen, head of investment strategy at KGI Asia in Hong Kong. “Market liquidity is also relatively high as local investors continue to add positions to chase the rally.”

Stocks rose as Hong Kong sent an investment delegation to strengthen ties with businesses in the Middle East. Among notable agreements, Hong Kong Exchanges and Clearing and its Saudi Arabia counterpart agreed to collaborate on cross listings. giving the city a potential boost in initial public offerings. HKEX rose 0.6 per cent to HK$339.60.