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Georgina Lee

Deb Price

Welcome to a fresh week, traders --
Stocks in Hong Kong and the mainland rallied today, given a lift by a step by China's central bank to inject liquidity into the financial system and improve sentiment about US-China trade talks.
Please help us improve our blog by taking this quick -- under 2 minutes! -- survey. Your feedback will really help us make the blog better for you!
Also, if you would like the Live Stocks Blog emailed to you each morning, shoot Deb a message at deb.price@scmp.com.
--- Georgina Lee and Deb Price in Hong Kong 
Note: Information in this blog is on an "as is" basis and not a solicitation or offer to buy or sell any securities or otherwise; and is not investment/professional advice or services in this regard.  It is subject to our T&C.  SCMP (as defined in T&C) shall not be liable for any loss, damage and costs relating to any investments in securities or otherwise in this connection.
 


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Bubble tea giant Mixue’s IPO powered by prowess in procuring, production, prices: analysts

Why dangerous debt dynamics aren’t catching up with economic policy

Stocks

Stocks Blog: Tencent, AIA gain, while BeiGene drops on profit taking 

Protesters and riot police battling Monday on the streets of Hong Kong. Photo: Winson Wong 

Protesters and police clash on Sunday. Photo: Sam Tsang

Business

Markets

Life Insurance giant AIA gets boost as Daiwa Capital lifts target price
China stocks rise on central bank's latest liquidity injection


Tencent

Alibaba

China stock market

Stock Connect

HSBC

Hong Kong protests

Trade war

Live

Here’s what we are watching this morning:
Friday US markets/ What futures foretell
--The S&P 500 rose 0.8 per cent, the Nasdaq climbed 0.7 per cent and the Dow Jones Industrial Average rose 0.8 per cent. 
-- Hong Kong futures are up 0.3 per cent, the A50 are up 0.06 per cent
IPO debuts: Beijing Compass Technology Development (300803 CH), Beijing Kingsoft Office Software (688111 CH)
Economic statistics/Central Bank action: October foreign direct investment in China 
Earnings: CSPC Pharma (1093 HK)   


Morning guidance 

After a rocky start, the Stock Connect is now heralded as a great success, giving mainland Chinese investors access to such home-grown stars as Tencent Holdings and at some point e-commerce giant Alibaba Group Holding while giving Hong Kong and global investors the ability to buy such high fliers as liquor giant Kweichow Moutai.
On Sunday, the programme turned 5 years old. 
Northbound trading of eligible shares has increased mightily: Total turnover over the past five years topped 16.5 trillion yuan by the end of August.
And now southbound trading averages HK$5.3 billion a day. That represents about 8.4 per cent of the total daily trading value at the Hong Kong exchange.
There are peculiarities that traders venturing into unfamiliar markets must learn.
Not all holidays are not the same on the mainland and in Hong Kong, for example, which adds to how many days the markets are closed and can lengthen the time it takes for transactions to become final.
Also, there is a one-day requirement to hold a newly bought stock in China, meaning no day trading.
Read full story here on the Stock Connect. 


Stock Connect had a tough start but, at 5 years old, is deemed a great success

Hong Kong residential property sales on Sunday recorded their worst performance since the social unrest started in June after buyers stayed away amid intensifying protests.
Only four out of 144 units at Chinachem Group’s Sol City development in protest hotspot Yuen Long were sold as of 6pm, according to agents. Fewer than 10 potential buyers were at the sales office at Nina Tower in Tsuen Wan when sales commenced at 10am.
Another new project, Crescent Green, launched by Road King Infrastructure in the same district on Friday fared poorly as only 29 out of 67 units were sold.
Two weeks earlier, on November 2 and 3, only 35 per cent of 435 units offered by five developers found buyers.
Read full story here. 


Hong Kong records worst weekend home sales since June amid protests

The Hang Seng rose 0.5 per cent to 26,454.53, despite a Sunday of intense clashes between protesters and police. 
Tencent (700 HK) rose 0.5 per cent to HK$321.60, after being weighed down last week when its third quarter revenue and profit missed estimates. 
The other two heavyweights on the benchmark gained.
AIA (1299 HK), the giant insurer and financial service provider, rose 1.4 per cent to HK$78.10, while HSBC (5 HK)  climbed 0.3 per cent to HK$57.90.
Apple supplier AAC Technologies (2018 HK) rose 0.7 per cent to HK$51.55.
Meanwhile, BeiGene (6160HK), which got a big boost last week when it announced the US Food and Drug Administration had given it accelerated approval for its blood cancer drug, fell 1.8 per cent to HK$123.
-- Deb Price    


Tencent, AAC Technologies gain in rising Hang Seng 

The CSI 300, which tracks blue chips listed on Shanghai and Shenzhen, edged down less than 0.1 per cent after market opened, at 3,874.44.
The Shanghai Composite Index also slipped down by the same fraction, at 2,889.55.
China’s central bank is expected to lower the loan prime rate (LPR) this week, the third time since the benchmark was introduced in August. LPR is a rate that captures the average of the 18 reporting banks’ lending rate to the highest quality borrowers, and is used by banks in pricing new loans to households and businesses.
On Saturday, the People’s Bank of China said In its third quarter monetary policy report that it would “increase counter-cyclical adjustment” to ward off downward pressure on the economy, as GDP growth in the third quarter recorded the slowest rate in nearly three decades, at 6 per cent. The PBOC also renewed its concern about inflation risks, Bloomberg reported.
The central bank has lowered the one-year LPR by 11 basis points through two cuts in August and September; while it left the 5-year LPR unchanged.
-- Georgina Lee 


China benchmarks dip slightly lower after PBOC’s weekend report expressing slowdown concern

Beijing Kingsoft Office Software (688111 CH) tripled in its debut on China’s science and technology innovation board, the Nasdaq-style, tech-heavy market in Shanghai also dubbed the Star board.
It rose to 139 yuan, up 203 per cent minutes after market opened, with a total 1.6 billion yuan turnover.
The company, which was spun out from Hong Kong-listed Kingsoft Corp. (3888 HK), priced its IPO share offering at 45.86 yuan. 
In Hong Kong, Kingsoft (3888 HK) was up 1.3 per cent at HK$19.2.
-- Georgina Lee 


Beijing Kingsoft Office Software surges on Star tech board trading debut

Retailers continue to see their shares hammered, as Sunday protests in Hong Kong erupted into fierce battles. 
Among jewellery and watch retailers, 23 stocks were down, four unchanged and only two posting gains, according to a gauge by Etnet.
Chow Sang Sang (116 HK) rose 0.1 to HK$8.95 and Chow Tai Fook (1929 HK) inched up by the same to HK$6.73.
Luk Fook Holdings (590 HK) slipped 0.2 per cent to HK$20.45.
King Fook Holdings (280 HK)  was the top loser in the jewellery and watches sector, falling 4.6 per cent to HK$0.31.
Retailers have seen their foot traffic plunge as mainland Chinese tourists stay away from the city and locals go out less due to the traffic disruptions and fear caused by the demonstrations.
  -- Deb Price 


King Fook Holdings leads losses among jewellery and watch stocks 

China Securities Regulatory Commission’s announcement on Friday that it would remove a limit on the public float of mainland companies listed in Hong Kong -- the so called “full circulation” reform of H shares -- would enable domestic unlisted shares of these mainland companies to be coverted into H shares for listing and trading on the Hong Kong bourse.
These shares include those held by domestic shareholders prior to the stock listing, and those held by foreign shareholders. It applies to qualified companies already listed or planning for an IPO in Hong Kong.
According to investment bank research cited by mainland media China Business Network, the reform is expected to enable issuers of 160 H shares, which are shares issued by mainland-incorporated enterprises that are listed and traded in Hong Kong, to fully convert their unlisted shares.
The Hang Seng China Enterprise Index, or H share index, was up 0.8 per cent at 10,503.9. The Hang Seng blue chip index was up about 1 per cent to 26,575.81.
-- Georgina Lee    


Chinese securities watchdog pushes ‘H’ share reform

After much anticipation and several delays, Huawei’s foldable Mate X 5G phone went on sale last weekend, becoming the second smartphone featuring a foldable screen after Samsung Galaxy Fold.
The phone, powered by Huawei’s Kirin 980 processor, costs a jaw dropping 16,999 yuan (US$2,427). Currently the phone is available only on its own e-commerce site, Vmall. It is unclear if the Chinese tech giant will sell it to other countries amid the scrutiny on Huawei by several foreign governments.
Shares linked to makers of flexible OLED (organic light-emitting diode), which is used in foldable phones, and other related technology in the supply chain surged to the daily 10-per cent up limit.
These include Guangdong Senssun Weighing Apparatus Group (002870 CH), at 25.32 yuan; Dongguan Eontec (300328 CH) , at 12.89 yuan; NBTM New Materials Group (600114 CH) at 6.95 yuan; Shenzhen TXD Technology (002845 CH) rose 7.5 per cent at 18.58 yuan.
Here’s a video about foldable phones. 
-- Georgina Lee    


Foldable screen makers surge in China after Huawei finally debuts foldable phone Mate X

The Airport Authority in Hong Kong has rejected pleas for relief measures from a group of airlines who wrote to the authority asking for waivers of airport fees and charges.
Hong Kong’s anti-government protest intensified over the weekend as rioters occupied university campuses and continued violent, arson-filled standoffs with the police into today. The protests, now in their sixth month, have depressed passenger traffic in what has been one of the busiest airports in Asia.
In September alone, Hong Kong Airport passenger traffic fell by 710,000 to 4.85 million, compared to 5.56 million in the same month last year. There were 802,000 fewer travellers using the airport in October, some 13 per cent down compared with the same month last year.
There were 74.5 million travellers who used HKIA last year. This year’s figure is likely to fall by 2 million, according to the airport operator’s estimates.
Cathay Pacific (293 HK), the city’s flagship airline, climbed 0.3 per cent at HK$9.85 in a rising market. China Eastern Airlines (670 HK) declined 1 per cent to HK$4; China Southern (1055 HK) fell 1 per cent at HK$4.95.
Read Danny Lee’s story here.   


Hong Kong Airport Authority offers no relief to protest-battered airlines

Beijing Compass Technology Development (300803 CH) shot up to the upside limit of 44 per cent to 9 yuan, on its debut on ChiNext board of the Shenzhen stock exchange.
A total of 927,300 yuan turnover was recorded.
Its offer price was at 6.25 yuan. The company develops investment software and solutions for securities, foreign exchange trading and analysis.
-- Georgina Lee 


Beijing Compass Technology Development surges to first-day up limit in Shenzhen debut

The Hang Seng is having a solid morning, climbing 1.5 per cent to 26,627.97. 
“The US stock market was at a new high, and a trade deal between the US and China will be reached soon,”  Francis Lun Sheung-nim, chief executive of GEO Securities, said of what is driving investor sentiment.
The US and China had “constructive discussions” over the major concerns of two sides, after the representatives had a phone call on Saturday, Chinese state-owned Xinhua News reported, citing China’s Ministry of Commerce.
“Plus, Alibaba is going public in Hong Kong, which is good news. So Hong Kong stocks are particularly good today.” (Alibaba is the parent company of the South China Morning Post.)
The e-commerce giant Alibaba will be listed on Hong Kong’s stock exchange on November 26.
Property stocks are getting a boost today from the latest Centa-City Leading Index showing property prices rose 1.5 per cent last week,  which was the second week in a row, on the heels of interest rate cuts. 
“Because of the latest report, Hong Kong property prices not only did not fall but rose a little bit. What a miracle,” said Lun.
Henderson Land Development (12 HK) rose 1.6 per cent to HK$37.40, Sun Hung Kai Properties (16 HK) climbed 2 per cent to HK$109.60, and New World Development (17 HK) rose 1.5 per cent to HK$10.58.
-- Snow Xia   


Hang Seng gets boost as partial trade deal seems close, says Francis Lun

Sun Hung Kai Properties (16 HK), which ended its previous three straight days of losses, has climbed 2.4 per cent to HK$110. Wharf REIC (1997 HK), a leading retail property landlord with shopping malls in key tourist and commercial districts hit hard by the ongoing protest, also rose, by 3.3 per cent to HK$43.4.
On Sunday, residential property sales showed a  poor performance, as only four out of 144 units at the Chinachem Group’s Sol City development in protest hot spot Yuen Long were sold as of 6pm, according to agents. This came during a full day of intense, violent stand-offs between protesters and police at a university city campus in Tsim Sha Tsui.
Some analysts said so long as there is no end game in sight on how the protest will end, property developers with sizable shopping malls portfolios in Hong Kong will continue to be weighed down by the political unrest.
-- Georgina Lee    


Sun Hung Kai, Wharf REIC rally

Competition in China’s liquor market will intensify, with super premium brands gaining share, according to a new Jefferies report citing a liquor expert who is a distributor in southern China. 
“The expert is bullish on super premium liquor brands (retail price higher than Rmb600/bottle). Helped by their strong branding, super premium brands will continue to raise their retail prices, move up product mix, and deliver positive volume growth. The category is currently at Rmb120bn sales size and the expert forecasts it to achieve 20-25% growth next year,” Jefferies writes.
“The expert expects competition to intensify between mid-high end liquor (retail price at Rmb300-600/bottle). Particularly, national mid-high end brands will see intensified competition with regional liquor leaders. Total demand for the segment will continue to expand, helped by consumers’ trading up from low end; however, due to higher base, total growth might slow down in near term. The category is currently at Rmb50bn sales size and the expert forecasts it to achieve 20-25% growth next year,” the analysts write.
Liquor and beer stocks in China are posting losses today, according to a gauge by Xuanubao, falling 0.7 per cent and 1.2 per cent respectively. 
Kweichow Moutai (600519 CH) slipped 0.2 per cent to HK$1,222.96.
  -- Deb Price


Battle for share of China’s liquor market to intensify, Jefferies reports 

Shares of the sofa and mattress product maker rose to an over 15-month high, after Citi raised its target price to HK$6.80, saying the stock continues to remain on its China mid-cap top pick list, Bloomberg reported.
The upgrade was driven by expected earnings recovery in the fiscal year of 2021, due to a successful ramp up of its Vietnam factory, analyst Eric Lau wrote in a note. The new target price points to a 30 per cent upside from its close on last Friday.
Man Wah (1999 HK) has shot up 8.6 per cent to HK$5.69, its highest price since the end of July 2018.
-- Georgina Lee 


Sofa maker Man Wah Holdings surges to over 15-month high after Citi upgrade

Overnight, the Communist Party’s mouthpiece, People’s Daily, published a hard-hitting commentary stating that there is “no room” for compromise in the struggle with the rioters.
“What we are faced with today is a struggle between safeguarding ‘one country, two systems’ and destroying it,” the commentary says. “On this issue that involves national sovereignty, and the future of Hong Kong, there is no middle ground and absolutely no room for compromise.”
The commentary also reiterates that Beijing would not hesitate to crush any attempt to challenge national sovereignty, security and unity. “Any attempts to challenge these ‘three bottom lines’, and interfere and sabotage ‘one country, two systems’ are just delusional, and futile and doomed to fail,” it says.
Catch up with the SCMP’s live blog on the protests here. 


‘No room for compromise on Hong Kong’

Hong Kong is being pushed to the brink of its worst recession since the 1997 handover, as the city is being “swallowed up” by violence and hatred amid the ongoing anti-government protests, finance chief Paul Chan Mo-po has warned.
Chan condemned the violent protests, saying they were “directly endangering the lives of innocent citizens and eating up Hong Kong’s long-term treasured values of civility and rationality”.
The financial secretary added: “Such acts are close to terrorism.”
The city has been gripped by more than five months of protests – triggered by the now-withdrawn extradition bill – which have evolved into a wider anti-government campaign and escalating levels of violence.
“The whole of society is being swallowed up by violence and hatred. It has also led Hong Kong to an extremely dangerous position,” Chan said.
Read full story here by Ng Kang-chung.


Hong Kong pushed to brink of worst recession since 1997 handover, says Financial secretary

Chinese banks and insurers buoyed the Shanghai Composite Index, lifting it higher from its flat opening this morning.
At the lunch break, the sectors helped lead the Shanghai index higher in index point terms.
China Life Insurance (601628 CH) rose 3 per cent, at 35.63 yuan; China Merchants Bank (600036 CH) climbed 2 per cent at 37.55 yuan; Ping An Insurance (601318 CH) edged up 0.6 per cent at 88.41 yuan; Industrial Bank  (601166 CH) rose 2.2 per cent at 19.89 yuan; and Industrial and Commercial Bank of China (601398 CH) rose 0.4 per cent at 5.81 yuan.
Sentiment may be improving over more progress being voiced over the weekend in the ongoing US-China trade negotiations.
A high-level phone call between Chinese and US trade negotiators on Saturday was “constructive”, according to China’s state news agency Xinhua.
China’s Vice-Premier Liu He, US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin discussed the two sides’ core issues for the first phase of an initial trade deal, and agreed to maintain close communication. White House economic adviser Larry Kudlow said last Thursday that the two sides were getting close to a deal, elaborating a day later that a partial trade agreement could be signed at the ministerial level, rather than by the two nations’ presidents.
The Shanghai Composite Index was up 0.6 per cent, at 2,908.12. The CSI 300, which tracks blue chips listed on both Shanghai and Shenzhen, rose 0.8 per cent, at 3,908.22.
-- Georgina Lee 


Banks and insurers bolster Shanghai index by lunch break, CSI 300 also rises

CSPC Pharmaceutical Group (1093 HK) posted a 24 per cent year-on-year rise in net profit to 2.81 billion yuan for the year’s first nine months, similar to the growth of 24.8 per cent seen in the year’s first-half and it amounted to 70 per cent of analysts’ consensus forecast for the full-year.
Revenue of the Shijiazhuang, Hebei province company grew 27.5 per cent to 16.8 billion yuan.
The revenue growth was led by a 51.9 per cent jump in sales of innovative drug products to 9.53 billion yuan, while that of generic drugs products rose 6 per cent to 3.86 billion yuan.
Sales of vitamin C, antibiotics and other products increased 4.6 per cent to 3.38 billion yuan.
The company is forecast to see net profit grow 27 per cent to 4.01 billion yuan for the whole of this year from 3.16 billion yuan last year, according to the average estimate of 20 analysts polled by Bloomberg.
CSPC shares slid 1.7 per cent to HK$20.45 at the close of the morning trading session ahead of the results.
The stock has surged just over 70 per cent in the past three months.
— Eric Ng


CSPC Pharmaceutical posts 24 percent net profit growth

The Hang Seng Index is getting a double shot of optimism -- from the new record high of the S&P 500 last Friday and positive talk that the US and China may be nearer a partial trade deal, says Atta Capital portfolio manager Alan Li.
It has risen 1 per cent today to 26,590.87.
But, Li warned, investors remain concerned about the clashes between police and protesters at Polytechnic University.   
“The Hang Seng Index held 26,000 last week,” he noted. “It’s still in an up-trend channel.”
Last week, the Hang Seng lost a total of 4.8 per cent, with 1,324.48 points lost. On Tuesday, it rallied, breaking back through 27,000 to 27,065.28.
Last Monday, it dropped 2.6 per cent, pushing it below 27,000, to 26,926.55. Prior to that, it had been above 27,000 for six straight sessions.  
The high for the year was on April 9, when it reached 30,157.49. Its low was on January 3, when it stood at 25,064.36.
 

-- Deb Price 


Hang Seng still in ‘up trend,’ says Alan Li

“Renewed optimism about U.S.-China trade negotiations seems to have been the main initial driver of improved risk sentiment,” said Patrik Schowitz, global multi-asset strategist at J.P. Morgan Asset Management.
“In the current round of talks, more than in previous rounds, we see momentum toward reaching at least a limited trade deal, and certainly a mini-deal would remove some of the negative sentiment overhang for the real economy and markets. 
“But what is likely more important for risk sentiment from here are early signs of an upturn in the macro data. Global as well as U.S. manufacturing PMIs have moved up in their latest readings, and macro data from some of the bellwether Asian manufacturing economies have been improving as well,”  he said.
J.P. Morgan sees the probability of a U.S. recession over the next 12 months – “the market’s key underlying worry” – is now roughly 20 per cent to 30 per cent versus nearly 50 per cent  just a few weeks ago. 
“To be clear, we think it’s too early to give the all-clear for risk assets.”
“... We have upgraded our outlook on equities as an asset class and, while maintaining an overall cautious stance, moved closer to neutral equity positioning in our multi-asset portfolios. .... Emerging market equities are now our most favored region alongside U.S. large cap equities, which we believe can do relatively well under a range of scenarios. Our least preferred markets are Australia and U.S. small cap equities.”
-- Deb Price    


J.P. Morgan upgrades equities outlook but warns ‘too early to give the all-clear for risk assets’

CSPC Pharmaceutical Group (1093 HK) is trading down 1.7 per cent at HK$20.45, not budging after it released results at the lunch break showing a 24 per cent year-on-year rise in net profit to 2.81 billion yuan for the year’s first nine months.
The revenue growth was led by a 51.9 per cent jump in sales of innovative drug products to 9.53 billion yuan.
-- Deb Price and Eric Ng   


Investors not impressed by CSPC Pharmaceutical results 

Leading Chinese benchmarks continue to hold gains after lunch.
The CSI 300 of large cap stocks traded in Shanghai and Shenzhen was up 0.7 per cent at 3,905.43, as investors cheered recent supportive monetary measures from the central bank.
The People’s Bank of China has lowered the seven-day reverse repo rate to 2.5 per cent from 2.55 per cent, the first such cut since 2015, as part of its open market operations that saw it inject 180 billion yuan into the financial system.
Through a reverse repo, the central bank buys short-term bonds from commercial banks with an agreement to sell them back in the future.
The step comes after the central bank just last week extended another 200 billion yuan through its medium-term lending facility, which is another funding facility that allows the central bank to inject liquidity into the banking system and influence interest rates for longer term loans.
The PBOC has expressed concerns about the country’s slowing economy, as third quarter GDP growth slowed to just 6 per cent, the slowest rate in nearly three decades.
-- Georgina Lee 


China markets rally as central bank injects liquidity into system

China’s leading benchmarks finished higher, as investors cheered the central bank’s latest move to inject liquidity into the financial system to counter the pressure on China’s economy to slow further.
The CSI 300, which tracks blue chips listed on Shanghai and Shenzhen bourses, rose 0.8 per cent at 3907.93, while the Shanghai Composite Index finished up 0.6 per cent at 2,909.2.
In an unexpected move, the People’s Bank of China lowered the seven-day reverse repo rate to 2.5 per cent from 2.55 per cent, the first such cut since 2015, as part of its open market operations that saw it inject 180 billion yuan into the financial system. In a reverse repo, the central bank buys short-term bonds from commercial banks with an agreement to sell them back in the future.
“The Shanghai Composite Index last Friday dropped below the key 2,900- level for the first time in more than two months. The central bank’s supportive monetary measures have provided a timely impetus to Chinese stocks to get back to that level today,” said Linus Yip, chief strategist of First Shanghai Securities.
Keeping the Shanghai index higher were leading banks and insurers.
Ping An Insurance (601318 CH) rose 0.9 per cent to 88.71 yuan, Industrial Bank  (601166 CH) climbed 2.4 per cent to 19.93 yuan, and China Merchants Bank (600036 HK) rose 1.8 per cent to 37.5 yuan.
Liquor distiller giant Kweichow Moutai (600519 CH) rose 0.2 per cent to 1227.28 yuan. Elsewhere, energy stocks also did well, with China Oilfield Services (601808 CH) rising 7 per cent to 5.8 yuan, while China Shenhua Energy (601088 CH) rose 1.5 per cent to 17.16 yuan.
-- Georgina Lee 


China stocks boosted by central bank’s latest liquidity injection

Life insurance giant AIA (1299 HK),  the heavyweight on the Hang Seng, is rallying today, as Daiwa Capital Markets lifted its 12-month target price to HK$97 from HK$95 and maintained its “buy” rating.
“Despite rising competition and industry-wide price cuts in critical illness products in China’s life insurance industry, AIA has remained largely disciplined in its pricing and highlighted its unique agency team as its biggest advantage and that it can afford not to engage in a price war but still deliver much higher VNB growth than domestic peers,” Leon Qi and Susie Liu wrote in a new note. VNB is the value of new business, which is the present value of what  future profits will be on new business written in the year.
“We continue to reiterate that the HK impact is a short-term pause rather than a long-term stop and will not affect AIA’s structural growth profile,” they wrote.
Its risk is major outflows from Hong Kong.
“While AIA is not immune to external volatilities, we believe its differentiated business model, together with clear strategic priorities and disciplined execution, continues to offer the best choice for investors looking to benefit from the structural growth in Asian life insurance markets,” the analysts said. 
AIA has risen 1.7 per cent to HK$78.30.
-- Deb Price    


Life Insurance giant AIA gets boost as Daiwa Capital lifts target price 

Hong Kong’s main benchmark ended 1.4 per cent higher, at 26,681.09, as blue chips temporarily shrugged off concerns of city’s six-month old social unrest and rose on a technical rebound.
“The Hang Seng Index lost over 1,300 points last week. In recent weeks, the Hang Seng Index has generally looked to the (China) A share market for more direction,” said Linus Yip, chief strategist of First Shanghai Securities.
The A share market got a boost by the People’s Bank of China, which lowered the seven-day reverse repo rate to 2.5 per cent from 2.55 per cent, the first such cut since 2015, as part of its open market operations that saw it inject 180 billion yuan into the financial system.
That appeared to temporarily drown out concerns on Hong Kong’s economy, which has entered into a technical recession in the third quarter as the protests drag into their sixth month. 
Monday, a group of hard-core protesters were holed up at a university in the city amid a weekend stand-off with the police during which time tear gas was fired and a public bridge and part of the campus were torched.
Leading the index higher were Tencent (700 HK) which rose 3.1 per cent to HK$330, and insurer AIA (1299 HK), which rose 1.9 per cent to HK$78.5, after Daiwa Capital Markets lifted its 12-month target price to HK$97 from HK$95 and maintained its “buy” rating.
Selective H shares in the blue chip index also gained. Geely Auto (175 HK) surged 4.5 per cent to HK$15.4, while Want Want China (151 HK) rose 0.9 per cent to HK$6.39.
Yip said selective H shares rose on the expectation that their weighting in the HSI will increase, after China securities regulator announced last week that it would remove a limit on the public float of mainland companies listed in Hong Kong as part of its so called “full circulation” reform of H shares.
“Many of these indexes are calculated based on a stock’s free float market capitalization. Hence, if these H shares going forward will see their free float increase, that should bring more net inflow into these stocks such as investment from passive funds tracking the index,” said Yip.
-- Georgina Lee 


Stocks Blog: Tencent, AIA gain, while BeiGene drops on profit taking

Life Insurance giant AIA gets boost as Daiwa Capital lifts target price China stocks rise on central bank's latest liquidity injection

Life Insurance giant AIA gets boost as Daiwa Capital lifts target price

China stocks rise on central bank's latest liquidity injection