Hong Kong and China markets fall amid Covid-19 concerns even as data shows China’s economic recovery has broadened

Hang Seng Index dropped 0.7 per cent on Tuesday, while the Shanghai Composite slipped 0.1 per cent
Chinese retail sales and industrial production rose in November, latest data shows

Alibaba

Martin Choi

Published: 10:37am, 15 Dec, 2020

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Hong Kong and China markets fell on Tuesday, as investors weighed concerns about increasing Covid-19 deaths, infections and lockdowns around the world against the roll-out of coronavirus vaccines.

The Hang Seng Index dropped 0.7 per cent to 26,207.29 for its second consecutive day of declines, having fallen 0.4 per cent on Monday. The Shanghai Composite also fell, paring gains of as much as 0.6 per cent to decline by 0.1 per cent. It recorded gains of 0.7 per cent on Monday.

New waves of the pandemic have forced Germany, the Netherlands and London back into stricter lockdowns over the Christmas holidays, while cases in Japan and South Korea have also surged, according to Reuters.

More than 1,000 cases of a new variant of the coronavirus have been identified in England. The government in the United Kingdom also said that London will move into England’s highest tier of Covid-19 restrictions, because of an exponential rise in infection rates.

In the United States, the first coronavirus vaccinations were administered on Monday, hours before the number of Americans killed by Covid-19 passed 300,000.

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First Covid-19 vaccine administered as US death toll passes 300,000

“Positive vaccine news has been a game changer for markets. We now know we are building a bridge to somewhere, providing clarity for policymakers, households and companies about getting to a post Covid-19 stage. Yet, disappointing jobs data in recent weeks points to near-term risks, as the virus surges around the US, potentially slowing the restart,” analysts led by Jean Boivin, head of BlackRock Investment Institute, said in a note.

In Hong Kong, big technology companies continued to decline, after China’s antitrust regulator imposed fines on the affiliates of Alibaba Group Holding, Tencent Holdings and SF Holding for “monopolistic behaviour” on Monday.

Alibaba, which owns this newspaper, fell 2.2 per cent to HK$246. Tencent dropped 1.9 per cent to HK$560. Food delivery giant Meituan, which was added to the Hang Seng Index as a constituent last week, fell 3 per cent to HK$274.20. The Hang Seng Tech Index of 30 top technology companies retreated 0.4 per cent on Tuesday.

02:02

Fourth wave of coronavirus cases in Hong Kong prompts tougher Covid-19 measures

Power tools giant Techtronic Industries led the declines among blue chips, falling 3.6 per cent. Of the 52 constituent members of the benchmark Hang Seng Index, 36 recorded declines.

Pharmaceuticals bucked the trend. Sino Biopharmaceuticals rose 5.3 per cent, the biggest gainer among blue chips. Last week, the company announced a US$515 million investment in Sinovac’s Covid-19 vaccine unit. The first batch of 1 million of Sinovac’s vaccines will arrive in Hong Kong next month, Chief Executive Carrie Lam Cheng Yuet-ngor said on Friday.

The new shares of coronavirus drugs research firm WuXi Biologics, which emerged after a stock split last month, also gained 3.6 per cent. CSPC Pharmaceutical rose 4.4 per cent.

Blue Moon Group, the detergent maker backed by Asian private-equity manager Hillhouse Capital, received strong demand for its initial public offering in Hong Kong, with the retail tranche being oversubscribed 301 times, according to a filing made to the Hong Kong stock exchange on Tuesday. The international tranche of the listing was oversubscribed 12 times.

Priced at HK$13.16 per share, the Guangzhou-based company raised net proceeds of HK$9.6 billion (U$1.2 billion). Trading in Blue Moon shares will start on Wednesday.

Mainland Chinese markets pared losses after data released on Tuesday showed China’s economic recovery had broadened in November. Retail sales, a key indicator of consumption trends in the world’s most populous country, grew by 5 per cent from a year earlier, marking their fourth successive month of expansion.

It was up from the 4.3 per cent growth recorded in October and was as expected, with a poll of analysts conducted by Bloomberg having forecast 5 per cent growth. The November growth rate was the highest since the 8 per cent recorded in December 2019.

Industrial production, a gauge of manufacturing, mining and utilities output in the Chinese economy, grew by 7 per cent from a year earlier, up slightly from 6.9 per cent in October, and in line with analysts’ expectations. The November growth rate was the highest since it reached 8.5 per cent in March 2019.

Three companies began trading on mainland bourses on Tuesday. In Shenzhen, Hefei Lifeon Pharmaceutical, which produces and sells drugs, rose 44 per cent to 33.31 yuan from its listing price of 23.13 yuan. In Shanghai, West Shanghai Automotive Service, which provides warehousing and transport services, gained 44 per cent to 23.23 yuan from its IPO price of 16.13 yuan. Shuhua Sports, which manufactures sports goods and fitness products, rose 44 per cent to 10.47 yuan from its listing price of 7.27 yuan.

Markets in Asia-Pacific also declined. South Korea’s Kospi fell 0.2 per cent, while Japan’s Nikkei 225 dropped 0.2 per cent. Australia’s S&P/ASX200 also declined 0.4 per cent.

Additional reporting by Georgina Lee

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