Hong Kong stocks complete biggest monthly gain since early 2023 as manufacturing report brightens China’s growth outlook

The purchasing managers’ index (PMI) of Chinese manufacturing activity beat estimates as it chalked up a second month in expansionary territory
Hong Kong’s market is the best performer among major peers globally this month, and the report is expected to add further impetus

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 10:29am, 30 Apr 2024

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Hong Kong stocks notched up the best monthly performance since January 2023 on optimism that China’s growth has stabilised after an official report indicated that manufacturing activity in April expanded at a faster-than-expected pace.

The Hang Seng Index rose 0.1 per cent to 17,763.03 at the close, taking its gain for April to 7.4 per cent. The Hang Seng Tech Index slipped 0.3 per cent and the Shanghai Composite Index dropped by the same amount.

Hong Kong’s market will be closed for the Labour Day holiday on Wednesday, while China’s onshore stock exchanges are closed the whole week.

Home appliance maker Haier Smart Home surged 7.9 per cent to HK$29.25 after saying that first-quarter profit increased 20 per cent from a year earlier. HSBC Holding rose 2.2 per cent to HK$67 after posting the better-than-estimated result for the first three months. CNOOC advanced 2.7 per cent to HK$20.30, and China Petroleum and Chemical Corp, also known as Sinopec, gained 1.1 per cent to HK$4.72.

The purchasing managers’ index (PMI) of manufacturing activity stood at 50.4 in April, above the reading of 50 that indicates expansion for a second straight month, China’s statistics bureau said on Tuesday. That beat the consensus estimate of a reading of 50.3 compiled by Bloomberg.

“Lots of positive factors have been building up for Hong Kong stocks, such as the extremely low valuations, more buy-backs and dividend payouts and easing of earnings forecast cuts,” said Zhao Hongmei, an analyst at Zhongtai Securities. “Whether the rally can hold up rests on the improvement in China’s economic fundamentals. We should be more positive on Hong Kong stocks now.”

Hong Kong’s market is the best performer among major markets globally this month, and the manufacturing report is expected to add further impetus. Sentiment on local stocks has taken a turn for better after overseas investors returned to the market, diversifying beyond Japan and India where valuations are stretched. Meanwhile, China’s securities regulator this month pledged to support the offshore market by expanding the scope of cross-border investment products and encouraging more listings of domestic companies.

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Property developer China Overseas Land and Investment jumped 29 per cent this month, making it the best performer on the Hang Seng Index, while peer China Resources Land surged 15 per cent. Both were buoyed by speculation that Beijing will roll out sweeping relief measures to bail out the property market.

Elsewhere, six exchange-traded funds (ETFs) that invest directly in bitcoin and ether made their debuts in Hong Kong on Tuesday. Among them, Harvest Bitcoin Spot ETF rose 1.6 per cent to HK$7.95 and its US dollar-traded fund added 1.8 per cent to US$1.018.

Other major Asian markets all traded higher. Japan’s Nikkei 225 climbed 1.2 per cent, while South Korea’s Kospi rose 0.2 per cent and Australia’s S&P/ASX 200 added 0.4 per cent.