Hong Kong, China stocks boosted by Nongfu Spring debut, rise amid Trump threat to scale back economic ties, tech stocks correction
- The Hang Seng Index rose by 0.1 per cent on Tuesday
- Shanghai Composite gains 0.7 per cent to 3,316.42
Hong Kong and China stocks gained on Tuesday, after Chinese water bottler Nongfu Spring’s stellar trading debut offset a correction in technology stocks as well as a threat by US President Donald Trump to scale back economic ties between the United States and China.
In Hong Kong, the Hang Seng Index edged up 0.1 per cent to 24,624.34, while the CSI300 index, which tracks the performance of the top 300 stocks on the Shanghai and Shenzhen exchanges, gained 0.5 per cent to 4,694.39. On the mainland, the Shanghai Composite Index gained 0.7 per cent to 3,316.42 at the close.
“Nongfu Spring’s IPO helped [market sentiment] a bit, allowing some of the liquidity that had been stored away to flow back into the markets,” said Stanley Chan, director of research at Emperor Securities. “But the overall sentiment around technology stocks still remains weak.”
The two-month-old Hang Seng Tech Index of the top 30 technology stocks fell 1.6 per cent on Tuesday. It had risen by as much as 1.2 per cent in early trading after three consecutive days of declines.
Chinese software firm Kingsoft dropped 5.6 per cent, while smartphone maker Xiaomi fell 7.2 per cent.
Benchmark heavyweight Tencent Holdings slipped as well, declining by 0.5 per cent. Chinese semiconductor maker SMIC, which plunged 23 per cent on Monday on fears it might be blacklisted by the Trump administration, however, rebounded 3.1 per cent to HK$18.80 on Tuesday. Chinese e-commerce giant Alibaba Group Holding, which owns the South China Morning Post, also rose, gaining 1.5 per cent.
“Investors are still worried about whether technology stocks are facing a correction,” Chan said. “There will be some short-term rebounds in technology stocks, but some investors will take profits. The market has lost some of the previous momentum that took technology stocks to new highs.”
“With the US presidential elections nearing, there is a lot of uncertainty over Trump’s next move. Such as, whether he will continue to pose restrictions on more Chinese technology companies [or not],” said Emperor Securities’ Chan. “This has put a lot of pressure on Chinese semiconductor and e-commerce firms recently.”
Some of the money flowing out of technology stocks had found its way back into traditional financial shares, such as those of mainland Chinese banks, he added. Bank of China rose 3.6 per cent, while China Construction Bank gained 3.1 per cent. China Life Insurance rose by 2.6 per cent.
The Industrial and Commercial Bank of China led the gains, rising 4.7 per cent on Tuesday. The Bank of Hangzhou, meanwhile, led the gains on the CSI300 index, with a 7.8 per cent rise.
Two stocks that were traded for the first time on Tuesday soared on their debuts on the Shanghai exchange. Fujian Foxit Software Development, which provides electronic document software products, rose 29.7 per cent to 309.27 yuan from its listing price of 238.53 yuan. Textile product manufacturer ZhongWang Fabric gained 44 per cent from its IPO price of 25.75 yuan.