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Passers-by wearing protective face masks are reflected on a stock quotation board outside a brokerage in Tokyo on September 17, 2020. Photo: Reuters
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Hong Kong stocks restrained amid Covid-19 concerns as mainland China stocks get a lift from state pledge to tackle defaults

  • Hang Seng Index added 0.1 per cent amid concerns about rising Covid-19 infections; Genscript slumped on chairman’s arrest
  • Beijing’s vow to crack down on ‘debt evasion’ gave sentiment a boost as the Shanghai Composite Index reaches August 18 high
Hang Seng Index
Iris Ouyang
Iris Ouyang
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Hong Kong stocks rose marginally from an eight-month high as traders watched for the fallout from a fourth wave of Covid-19 infections. Shares in mainland China bourses advanced as the government issued a “zero-tolerance” warning to debt issuers following several recent defaults.

The Hang Seng Index closed 0.1 per cent higher to 26,486.20, after a rally in the past three straight weeks lifted the benchmark to the highest level since early March. The Shanghai Composite Index advanced for a fourth day, rising 1.1 per cent to 3,414.49. It was its highest level since August 18.

New economy stocks paced gainers in Hong Kong. Xiaomi jumped 8 per cent to HK$27.60 as the Beijing-based smartphone maker prepares to report its quarterly earnings on Tuesday. Alibaba Group Holding added 4.3 per cent to HK$264. Lenovo Group rose 5.3 per cent to HK$5.77.

The increases came after Hong Kong Exchanges and Clearing launched on Monday the Hang Seng Tech Index Futures. Shares of the bourse operator rose 0.2 per cent to HK$376.80.

Hong Kong is tightening virus-control measures after 71 new cases were reported on Monday in addition to 68 on Sunday, the highest daily figure in about three months. The government delayed a travel-bubble plan with Singapore by two weeks and will hand out HK$5,000 (US$645) to each infected low-income resident to encourage testing.

“There’s no a clear direction in the market now, investors are switching back and forth between new economy and old economy stocks,” said Kingston Lin, director at AMTD securities brokerage in Hong Kong, noting traders tend to take a ‘wait and see’ attitude before the coming Thanksgiving break on Thursday. “New economy firms rose because local infections in Hong Kong deteriorated.”

Genscipt Biotech plunged by 14.8 per cent to HK$10.74, the most in two months. The Chinese gene and cell therapy firm said its chairman Zhang Fangliang has been arrested on suspicion of smuggling prohibited goods. It was the biggest drop since September 22, a day after Zhang was placed under “residential surveillance.”

The Shanghai Composite Index was buoyed by the government’s latest warning to douse any sign of systemic risk to the financial system.

The Financial Stability and Development Committee, led by vice-premier Liu He, called for a zero tolerance approach to debt evasion and vowed to protect investors’ interest, according to a statement published by state news agency Xinhua on Sunday.

Parent of BMW’s Chinese partner defaults on a bond, as declining car sales pile on to the debt woes of China’s corporate borrowers

The committee promised to investigate “fraudulent issuance, disclosure of false information, malicious transfer of assets and misappropriation of funds” after two high-profile bond defaults involving Huachen Automotive Group and Yongcheng Coal and Electricity rattled investors’ perception about the finances of state-owned enterprises.
Coal-related stocks led the gains on the news. Zhengzhou Coal Industry and Xishan Coal Electricity Group jumped by the 10 per cent limit. Both declined earlier this month after a default involving a state-owned coal and electricity firm in Henan province.

Stocks also gained because investors are betting on faster economic recovery from next quarter, said Shen Zhengyang, an equity strategist at Northeast Securities in Shanghai. “A-share will continue to rise although a readjustment is likely during this process as investors need to gain some returns at the end of the year and liquidity is not very loose.”

Among debutants, Zhongjing Food soared 204 per cent to 120.80 yuan, or more than tripled its stock-offering price, in Shenzhen. Mingxin Automotive Leather added 44 per cent to 33.36 yuan on its first day of trading in Shanghai.

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