Hong Kong stocks rally after China industrial profits data shows return to growth

Hong Kong stocks jumped on Monday in a recovery posted after the index registered its biggest weekly decline since January last Friday

Gains were triggered by data that showed profits for industrial companies in China rose 4 per cent from a month earlier in April

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The figures for the Hang Seng Index on a screen at the Hong Kong Stock Exchange in Hong Kong, China, on Tuesday, April 30, 2024. Photo: Bloomberg

Published: 10:53am, 27 May 2024Updated: 4:38pm, 27 May 2024

Hong Kong stocks rallied after data showed China’s industrial profits resumed growth in April, marking a recovery following the biggest weekly loss since January last Friday.

The Hang Seng Index climbed 1.2 per cent to 18,827.35 at close, rebounding from the previous week’s near 5 per cent decline. The Hang Seng Tech Index rose 1.7 per cent, while the Shanghai Composite Index advanced 1.1 per cent after the securities regulator tightened rules on stake reductions by major shareholders.

Lenovo Group rallied 8.9 per cent to HK$12.04, after at least four brokerages – including HSBC, DBS, CICC and CCBI – raised their price targets for the personal-computer maker.

“We expect Lenovo’s AI server shipments to grow 108 per cent year on year in the financial year ended March 2025, supported by easing GPU shortage,” DBS analysts said in a note after the bank raised its price target for the stock to HK$13.20 from HK$10. “We expect the server business to turn profitable in financial year ended March 2025 and an acceleration in PC shipment recovery to catalyse the re-rating.”

Chip maker Semiconductor Manufacturing International Corp climbed 7.4 per cent to HK$16.48 after a US$48 billion semiconductor investment fund was set up backed by Chinese finance ministry and state-owned banks, according to a business registry record on Chinese corporate database service Qichacha. The fund will focus on equity investment in the chip sector in Beijing’s latest effort to achieve self-sufficiency as the US seeks to restrict its growth.

A staff member works at a workshop of China First Heavy Industries (CFHI) in Qiqihar, northeast China’s Heilongjiang Province, April 28, 2024. Data published on Monday showed that profits for industrial companies in China rose 4 per cent from a month earlier in April. Photo: Xinhua

Data published on Monday showed that profits for industrial companies in China rose 4 per cent from a month earlier in April. That reversed a 3.5 per cent decline in the previous month, the National Bureau of Statistics said on Monday. The agency is also due to release the May report for the purchasing managers’ index for the manufacturing industry on Friday, which economists expect to stay above the expansionary zone.