Hong Kong, mainland stocks rack up weekly gains on latest signs China’s economic recovery is speeding up
- China June Caixin Service PMI hits 58.4, much higher than the 53.2 market expectation
- Auto stocks shoot up as sales of passenger cars in China rise for third consecutive month
Hong Kong and mainland stocks rallied, as fresh data and positive business sentiment out of China reinforced bets that recovery is gaining speed in the world’s second-largest economy after the devastation of the coronavirus.
The Hang Seng Index accelerated its gains in afternoon trading on Friday, rising 1 per cent to 25,373.12, the highest level since March 10. It ended the week with a 3.4 per cent gain.
On the mainland, the Shanghai Composite Index closed 2 per cent higher at 3,152.81. That was its highest level since April 24, 2019. It recorded a 5.8 per cent surge this week, racking up its third consecutive weekly gain.
“As the national security laws has been enacted, relevant uncertainties for the stock market have disappeared,” said Ernie Hon, head of research at Essence International Securities in Hong Kong, adding that he expects Hong Kong stocks will most likely continue to advance in July. “The valuation of Hong Kong stocks is way lower than other major markets, so recovery of valuation is happening, and recent IPOs have brought capital into Hong Kong.”
Auto stocks led the gains in Hong Kong, as sales of passenger cars in China rose for three consecutive months, jumping 11 per cent in June to 2.28 million, indicating further economic recovery. BYD surged nearly 14 per cent, while Geely Automobile Holdings surged nearly 13 per cent.
Financial stocks were also big winners. Ping An Insurance rose 1.4 per cent. Index heavyweight Tencent climbed 1.2 per cent to at record-high HK$524.5, after the tech giant closed for the first time above HK$500 on Thursday. Tencent’s market capitalisation reached more than HK$5 trillion.
