Tencent’s record high props up Hang Seng Index as Xi Jinping’s Shenzhen speech fails to add fuel to China’s stock market rally
- China’s benchmark stock indexes in Shanghai and Shenzhen fell, while the main gauge in Hong Kong was little changed after Xi Jinping’s keynote speech
- Tencent Holdings, Shenzhen’s hometown champion, rose 3 per cent to a record, propping up Hong Kong’s Hang Seng Index and the China Enterprises Index
President Xi Jinping’s keynote address in Shenzhen failed to fuel China’s stock rally, leaving the market short of a five-year high, as traders’ expectations were dashed by the lack of policy details from his speech. Shenzhen’s hometown champion Tencent Holdings rose to a record high, keeping key indices in Hong Kong in positive territory.
Shanghai’s Composite Index fell by 0.6 per cent while the benchmark on the Shenzhen exchange fell by the same percentage, and the CSI 300 index that tracks both markets fell 0.7 per cent. The three gauges were in negative territory throughout Xi’s nearly hour-long speech in Shenzhen.
Shenzhen will continue its role as a pioneer in China’s economic reforms, being exposed to more autonomy and favourable policies that will power further opening-up and innovation, the Chinese president said.
“The new development pattern is not a closed domestic cycle,” said Xi, making it clear he wants a “new open economic system.”
China Evergrande Group slumped by 17 per cent to HK$16.06 in Hong Kong. The world’s most indebted developer, Evergrande was seeking to raise HK$8.43 billion by selling 490 million shares in a top-up placement. The offer price between HK$16.50 and HK$17.20 each implies an as much as 15 per cent discount to the stock’s last closing price.
Declines were also recorded in other Asian markets that were trading at the same time, from Australia to Japan and South Korea. The Topix index fell 0.3 per cent in Tokyo while the Kospi index dropped by 0.9 per cent in Seoul, tracking the overnight sell-off in Wall Street.
The US markets were spooked by setbacks in the trials of experimental vaccines for treating the coronavirus pandemic. Eli Lilly said on Tuesday that enrolment in a government-sponsored clinical trial of its antibody therapy had been paused out of safety concerns, less than 24 hours after Johnson & Johnson halted research on its experimental vaccine because a study volunteer had fallen ill. The snag heightens fears that the sprint to find a medical breakthrough to contain the coronavirus pandemic may turn out into a long slog.
Countries across Europe also stiffened curbs to try to contain the resurgence of the pandemic. New cases increased at the fastest pace since April in Germany, the Dutch prime minister ordered a partial lockdown and France reported a spike in patients that need intensive care. Meanwhile, prospects for the US government’s fiscal stimulus before next month’s presidential election waned.
“With Covid-19 in the air, local investors appear to be more concerned looking over their shoulder for Covid-19 headlines than buying dips as those scare heads are likely to weigh on broader markets,” said Stephen Innes, a strategist at AxiCorp.