HSBC shares surge by half in two months as hopes of Covid-19 vaccine rekindle investors’ appetite for old-economy stocks

HSBC Holdings has rebounded 49 per cent from a September low, as investors around the world rotate into old-economy stocks

Asset managers like BlackRock have positioned themselves for a ‘cyclical rebound’ as risk of profit-taking in health care and tech stocks rises

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HSBC’s shares have climbed 49 per cent in the last two months. Photo: Felix Wong

Published: 7:30am, 30 Nov 2020Updated: 7:36am, 30 Nov 2020

Shares of HSBC Holdings have gained by almost half in the past two months as positive news about several Covid-19 vaccines has rekindled an appetite for stocks likely to pick up once the pandemic is over.

Cyclical stocks such as banks have made a strong comeback, at the expense of shares in health care companies, and technology firms that had benefited when working from home became the new normal during global lockdowns.

HSBC has rebounded 49 per cent from a September low. The Hang Seng Financial Index has risen 12 per cent over the past month, the best-performing sector among all the industry groups. The Hang Seng Tech Index has underperformed, rising 7.2 per cent in the past month.

“There has been quite a lot of switching to old economy stocks” by investors since news broke of positive developments in vaccine trials, said Louis Tse Ming-kwong, managing director of Wealthy Securities.

“If the vaccine is successfully launched, that will help people to go out and buy things, and use their credit cards. That will help banks,” said Tse.

Besides financials, transport and shipping stocks also stood to benefit. Hong Kong shipping giant Orient Overseas International has surged 77 per cent this month.

“Shipping companies’ share prices have made quite a strong recovery because there is quite a bit of demand. Investors anticipate economic recovery globally, so demand for that sort of transport service is strong,” said Tse.

“Transportation stocks such as MTR may also do well if the pandemic cools down a bit, and people go out.”