Hong Kong stocks extend New Year run as Chinese telecom giants surge, WuXi Biologics slides on insider selling

The Hang Seng Index rose 0.6 per cent, reversing from a 1.2 per cent loss, while the Shanghai Composite gained 0.7 per cent
China’s three telecom giants surge after NYSE scrapped its delisting plan; WuXi chairman trims stake for a second time in four months

Hang Seng Index

Martin Choi

Published: 11:23am, 5 Jan 2021

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Hong Kong stocks rose for a second day as China’s biggest phone carriers surged after the New York Stock Exchange reversed its decision to delist their American depositary receipts. WuXi Biologics slid after its chairman trimmed his stake for a second time in four months.

China Unicom rallied 8.5 per cent to HK$4.85, pacing gainers among blue chips on the benchmark Hang Seng Index. China Mobile rose 5.1 per cent to HK$46.10 while China Telecom added 3.3 per cent to HK$2.16. The rally added HK$58.7 billion (US$7.56 billion) to their market value.

The Hang Seng Index gained 0.6 per cent to 27,649.86 at the close while the Shanghai Composite also rose 0.7 per cent. Both added to their 0.9 per cent advance on Monday.

The US exchange backtracked after announcing on the eve of New Year a decision to remove the ADRs issued by the Chinese telecom giants from as soon this week to comply with President Donald Trump’s executive order.

“[The NYSE] should have gone through more detailed discussion before making the delisting decision,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, adding that the reversal was a little surprising. “They should not easily change their mind.”

China’s three telecom giants saw their market value evaporate by HK$610 billion in 2020 as US-China ties fell to decades low amid trade war, sanctions and measures to restrict so-called Communist Chinese military companies.

What should investors do as China Mobile, other telecoms companies face US delisting?

WuXi Biologics slumped 1.3 per cent to HK$101.90, after a company controlled by its chairman Ge Li agreed to sell a block of 102 million shares at HK$96.50 each or HK$9.84 billion, according to an exchange filing on Tuesday.

Ge also sold a block of 33 million shares in September, reportedly at HK$183 to HK$188 each, before the biotech company implemented at 1-to-3 stock split in November. WuXi surged 212 per cent in 2020, the best performer among Hang Seng Index members, after a 97 per cent jump in 2019.

On the mainland, medical equipment manufacturer Tinavi Medical Technologies shot up 20 per cent, leading gains on the Shanghai bourse. Memsensing Microsystems, which produces micro electromechanical system microphones, gained 16.4 per cent.

Markets across Asia Pacific were mixed with investors concerned about a spike in global Covid-19 cases as the UK widened lockdowns and Tokyo considers imposing a state of emergency. Australia’s S&P/ASX 200 was little changed, while Japan’s Nikkei 225 posted a 0.4 per cent decline. The Kospi in South Korea gained 1.6 per cent.

The UK imposed a third coronavirus lockdown late Monday, shutting schools and ordering the public to stay at home to battle the Covid-19 pandemic. The government had no option but to halt all social activities, education and non-essential travel in the face of a sudden and severe surge in infections, it said.

Hong Kong’s government on Monday said current measures including a ban on public gatherings of more than two people and restaurant dine-in services after 6pm would be extended to January 20 while schools would remain shut until the end of Lunar New Year holiday in February.