Sunny Optical, Geely Auto propel Hong Kong stocks to two-month high ahead of US presidential election

The Hang Seng Index closes 2 per cent higher at 24,939.73
Shanghai Composite Index gets a boost from a continuing recovery in corporate earnings

Hang Seng Index

Zhang Shidongin Shanghai

Published: 10:29am, 3 Nov 2020

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Hong Kong and China stocks both rose, with the city’s benchmark closing at a two-month high ahead of the US presidential election.

The Hang Seng Index climbed 2 per cent to 24,939.73 at the close on Tuesday, extending a 1.5 per cent gain a day earlier. The gauge finished at the highest level since September 3. Geely Automobile Holdings led the gains after Citigroup boosted the carmaker’s price target and sales projections.

The Shanghai Composite Index added 1.4 per cent to 3,271.07. The onshore stocks got a boost after a continuing recovery in corporate earnings. Third-quarter net income for the mainland-traded companies increased 17 per cent from a year earlier, reversing a 12 per cent decline for the previous three-month period, according to Haitong Securities.

Stocks in other major markets in Asia also rose, taking their cue from a moderate gain in US equities overnight. American investors rotated to sectors that would benefit from fresh stimulus including oil and material producers, while a volatility index remained at the elevated level. Polls continue to show Democrat Joe Biden ahead, though battleground states remain tight.

“Financial centres around the world [are] expecting a Democratic sweep, which is the key to unlocking Congress’ ability to deliver significant fiscal stimulus and benefit the US and global markets at a time of need,” said Stephen Innes, a strategist at Axi.

On the coronavirus front, the US reported a slight slowdown in new cases and Europe continued to be rattled by surging infections. The UK’s prime minister ordered England into a four-week partial lockdown, all but shuttering the economy, while other European countries prepared to increase restrictions.

Ant Group, China’s digital payment juggernaut, surged 50 per cent on the grey market two days before the official listing, signalling that the stock will soar in simultaneous debuts in Hong Kong and Shanghai on Thursday. The offering drew more than more than US$3 trillion worth of bids from individual investors in one of the most popular equity sales.

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Separately, four Chinese financial regulatory bodies, led by the People’s Bank of China, summon a meeting with the top executives of Ant including co-founder Jack Ma and executive chairman Eric Jing, according to a statement by the securities regulator, without elaborating on the purpose or content of the meeting.

In Hong Kong, Geely Automobile surged 5.5 per cent to HK$19.08, making it among the best performers on the Hang Seng Index. Citigroup raised the share-price estimate by 37 per cent to HK$41 and also lifted the sales projection on the release of five new models.

Sunny Optical Technology Group and AIA Group also surged with gains of at least 6 per cent

JW Cayman Therapeutics, an operator of clinical stage therapy platforms, dropped 7.6 per cent from the offer price to HK$22 on the first day of trading.

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