Hong Kong stocks rise to 4-month highs as corporate buy-backs lift investor sentiment
- Investors say a growing number of corporate buy-backs are signs that suggest the market is nearing a bottom
- Stocks of EV makers, including Li Auto and BYD advanced, after industry data showed that sales of electric vehicles in China jumped in March
Hong Kong stocks advanced on Wednesday, lifting the benchmark index to a four-month high, on hopes that more companies will return excess cash to shareholders via share buy-backs and support market gains.
The Hang Seng Index jumped 1.9 per cent to 17,139.17 at the close, the highest close since November 28. The Hang Seng Tech Index gained 2.1 per cent and the Shanghai Composite Index retreated 0.7 per cent.
Hang Seng Bank rallied 6 per cent to HK$99.70 after unveiling a share buy-back programme worth HK$3 billion (US$383.1 million). E-commerce behemoth Alibaba Group Holding surged 4.9 per cent to HK$73.95 and Tencent Holdings rose 3 per cent to HK$314.20. Both companies, the two biggest constituents of the Hang Seng Index, have unveiled stock repurchases this year.
“Corporate buy-backs are a rational choice for companies that see their share prices as undervalued,” said Yin Huiwei, an analyst at Mingsheng Securities. “Buy-backs are typically one of the signs that the market has hit bottom and it means this may be a good time for investors to return.”
About 61 Hong Kong-listed companies bought back combined HK$4.59 billion of their own stocks last week, with Tencent making the biggest repurchase with a HK$3 billion outlay, according to Zheshang Securities.