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Hong Kong’s Causeway Bay is busy as usual despite concerns surrounding the coronavirus pandemic. Investors pushed up the city’s benchmark index higher on Monday. Photo: Xiaomei Chen
BusinessMarkets

Geely Auto leads Hang Seng Index 1.5 per cent higher as investors shrug aside rising global coronavirus infections

  • Market sentiment was also boosted by strong activity in China’s manufacturing sector as economic rebound continued in the fourth quarter
  • The CSI300, which tracks the biggest companies on Shanghai and Shenzhen bourses, closed 0.5 per cent higher
Hang Seng Index
Martin Choi
Martin Choi
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Hong Kong and China markets started the first trading day of the month on a positive note following a sell-off last week, as investors shrugged off rising global coronavirus infections.

Market sentiment was also boosted by strong activity in China’s manufacturing sector last month, indicating that the nation’s robust rebound from the pandemic had continued in the first month of the fourth quarter.
The Hang Seng Index rose 1.5 per cent to 24,460.01, after falling 2 per cent on Friday for its first weekly decline in five. The CSI300, which tracks the biggest companies on Shanghai and Shenzhen bourses, rose 0.5 per cent. The index fell 1.7 per cent on Friday.

“The Hang Seng Index was oversold last week and has rebounded from the key support level at around 24,000,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.

China’s top infectious disease expert said over the weekend that a serious “second wave” of coronavirus infections is not expected in China. However, many countries in Europe were placed under a new round of lockdowns as the number of fresh cases continued to climb globally.

The Caixin/Markit manufacturing purchasing managers’ index (PMI) rose to 53.6 in October from 53.0 in September, above the Bloomberg survey expectation for a slight decline to 52.8, and to its highest level since January 2011. The survey confirmed the result of the official manufacturing PMI released by the National Bureau of Statistics on Saturday, which declined slightly to 51.4 from 51.5, but continued to show strong activity in the sector.

While China’s manufacturing activity continues to expand, the private sector and labour market remained under pressure, so more expansionary fiscal moves and targeted credit easing can be expected, analysts at China Renaissance led by Bruce Pang said in a report on Monday.

“We expect accommodative monetary policies, with more focus on targeted easing and improving the transmission mechanism to flow to the real sector, while fiscal policies will be more expansionary to stabilise the labour market as well as support households and SMEs [small and medium-sized enterprises],” the China Renaissance analysts said.

In Hong Kong, Geely Auto led gains among blue chips, rising 13.6 per cent. Polestar, the electric vehicle unit of the Chinese carmaker, was in advanced talks with investors to raise US$800 million to US$900 million in its first external fundraising, Reuters reported citing people familiar with the matter.

Chinese electric car maker BYD Company surged 12.7 per cent. Last week, the Shenzhen-based company reported net profits for the third quarter surged to 1.75 billion yuan (US$261.3 million), up from about 120 million yuan a year earlier.

Geely Auto gains in Hong Kong on Monday. Photo: Reuters

Chinese financials also rose, with ICBC adding 3.9 per cent and China Construction Bank gaining 3.6 per cent. Bank of China also added 3.3 per cent.

The Hang Seng Tech Index of top 30 technology stocks rose 0.7 per cent, led by a 3.6 per cent increase in BYD Electronic. Benchmark heavyweight Tencent inched up 1.8 per cent to HK$601.50, while Alibaba, the owner of this newspaper, added 1.6 per cent to HK$297.80.

All eyes are on Alibaba affiliate Ant Group’s initial public offering (IPO) in Shanghai and Hong Kong on Thursday, the largest IPO in global financial history which has soaked up more than US$3 trillion from retail investors.

On the CSI300, Shenzhen Inovance Tech, which manufactures industrial automation control products, powered the gainers with a 20 per cent surge.

Two stocks started trading on the Hong Kong and Shanghai bourses for the first time.

China International Capital Corporation, the mainland’s oldest investment bank, soared 31 per cent to 37.70 yuan from its IPO price of 28.78 yuan in Shanghai. GDS Holdings, a Shanghai-based developer and operator of data centres, gained 2.6 per cent to HK$83 from its offer price of HK$80.88 on the first day of its secondary listing in Hong Kong.
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