Hang Seng Index retreats after attempt to erase stock losses triggered by Covid-19, Wuhan lockdown
- Hang Seng Index retreated in late pullback despite record inflows from mainland China funds via Stock Connect programme
- Shanghai Composite Index has chalked up almost 4 per cent gain in the new year for its best start since 2008
The Hang Seng Index climbed as much as 0.5 per cent to 28,414.5, before retreating on Wednesday. A close above 28,341.04 level would have erased all the losses since January 22, a day before China erected barriers around Wuhan, the capital of Hubei province and the epicentre of Covid-19 outbreak, to fight the outbreak.
The gauge slipped 0.2 per cent to 28,235.60 at the close, trimming the advance this year to 3.7 per cent. That still puts the market on its best start to a year since an almost 5 per cent rally over the same period in 2018, according Bloomberg data.
“The global economy faces numerous economic headwinds due to the omnipresent Covid-19 and its new mutations,” said Stephen Innes, a strategist at Axicorp.
The Hang Seng Index has risen by about 30 per cent from the post-Covid depth of 21,696 in late March 2020. Still, local stocks are a laggard among the world’s major markets amid the city’s struggle with the viral outbreak and domestic political unrest. Members in the Hang Seng Index trade at 12.7 times estimated earnings, compared with 23.1 for the S&P 500 Index and 14 for the Shanghai Composite Index.
Hong Kong’s stock exchange operator HKEX topples Chicago’s CME as world’s most valuable as US-China rift brings in more listings
A slew of secondary listings of Chinese tech giants including JD.com and NetEase since last year have also bolstered sentiment, elevating the value of the bourse operator Hong Kong Exchanges and Clearing above that of CME Group.
Mainland Chinese traders have also been taking advantage of the valuation, cheapened by the sell-off in sanctioned Chinese stocks. They bought combined HK$42.2 billion (US$5.44 billion) of Hong Kong’s shares via the exchange link programme this week, according to stock exchange date, with daily inflow reaching a record HK$19.5 billion on Monday.
04:18
Hong Kong leader Carrie Lam still believes she did right thing in trying to pass extradition bill
The Shanghai Composite Index slipped 0.3 per cent at the end of trading. It had risen 3.9 per cent through Tuesday in the market’s most bullish start to a year since a 4.2 per cent advance over the same period in 2008. The CSI 300 Index of the biggest stocks traded in Shanghai and Shenzhen also retreated 0.3 per cent, falling from its highest level since January 2015.
Other markets in Asia all edged higher following an uptick in US stocks overnight, where the prospect of an economic recovery outweighed a rise in bond yields.
Technology stocks have been the biggest winners since the outbreak of the pandemic. Wuxi Biologics, Meituan and Xiaomi have all more than doubled over the past year, making them the best performers on the Hang Seng Index to navigate investors through the market turmoil.
Two out of the three debutants on Hong Kong’s main board kicked off trading with dismal starts on Wednesday. Legion Consortium, which provides logistic service, fell 13 per cent to HK$0.35. Tat Hong Equipment Services, a crane rental company, sank 8.7 per cent to HK$1.58 while textile producer Deyun Holding gained 3.8 per cent to HK$0.415.
Lenovo Group surged 9.7 per cent to HK$8.83 after its board approved a proposal to issue Chinese depositary receipts on Shanghai’s technology Star Market.
