Hong Kong stocks erase losses with HSBC’s bullish earnings, Macau casino winners as manufacturing slump worries China bulls

HSBC’s first-quarter report card surpasses market expectations as lender resumes quarterly dividend payout as planned

Official data show manufacturing in China contracted in April to the lowest since before the reopening late last year

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A man looks at the electronic screen displaying stock prices and the Hang Seng Index in Mong Kok, Hong Kong. Photo: Winson Wong

Published: 10:35am, 2 May 2023Updated: 5:14pm, 2 May 2023

Hong Kong stocks erased losses after HSBC surged on the back of a stellar set of earnings. The broader market struggled after a surprise slump in manufacturing in mainland China reignited concerns about an uneven post-pandemic recovery.

The Hang Seng Index gained 0.2 per cent to 19,933.81 at the close of Tuesday trading, after falling as much as 0.7 per cent. The benchmark index fell 2.5 per cent in April. The Tech Index was little changed, following a 9.4 per cent loss last month. Markets in mainland China are closed through Wednesday for the May Day holiday.

HSBC jumped 4.5 per cent to HK$58.65, the most since February 22. Alibaba Group rose 0.3 per cent to HK$82.30 and Tencent added 0.4 per cent to HK$345.80 and carmaker Xpeng jumped 2.5 per cent to HK$38.55. Limiting gains, Developer Country Garden slumped 1.5 per cent to HK$1.98, while peer Longfor slipped 0.7 per cent to HK$21.20.

HSBC, the city’s biggest commercial bank, made a pre-tax profit of US$12.9 billion, versus US$3.9 billion a year earlier, with gains in all geographies of operations. The lender proposed to pay a dividend, resuming payout on quarterly basis for the first time since 2019 as planned.

Sand China jumped 1.8 per cent to HK$28.35 and Galaxy Entertainment advanced 2.2 per cent to HK$56.70. Gaming revenue in Macau surged 450 per cent last month to a three-year high of 14.7 billion patacas (US$1.8 billion), fanning gains in the two leading casino concessionaires.

“The China reopening theme has not fully played out,” Jack Lee, who manages China A-shares funds at Schroders, said in a report. The fast-paced reopening “will provide substantial support to the recovery in consumer spending, which in turn will support domestic earnings in many sectors.”

Stocks earlier wavered as Chinese manufacturing shrank in April, with the official index falling to 49.2 in April from 51.9 in March, the statistics office said. Sub-gauges on new orders and export orders also shrank. The weak data overshadowed optimism about a rebound in consumption, including a surge in Macau gaming revenue in April.