Hang Seng Index tops pre-pandemic high on Alibaba, Tencent, CNOOC rally while China stocks slump by most in four months

Gains in Chinese tech giants lifted the Hang Seng Index above the January 22 level, a day before the Wuhan lockdown last year
Trump administration faced resistance from Treasury officials on plans to ban US investors from owning Alibaba and Tencent, reports say

Hang Seng Index

Zhang Shidongin Shanghai

Published: 10:51am, 14 Jan 2021

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Hong Kong stocks rose, with the benchmark index recouping all the losses sparked by the coronavirus outbreak a year ago. Alibaba Group Holding and Tencent Holdings rallied after reports saying the US decided against banning US investments in two of Asia’s biggest companies.

The Hang Seng Index gained 0.9 per cent to 28,496.86 at the close trading on Thursday, taking the gauge above 28,341.04 on January 22 last year, a day before China announced the lockdown of Wuhan, the epicentre of the Covid-19 outbreak. The benchmark briefly tested that level on Wednesday, before surrendering all gains.

Mainland-listed stocks, however, slumped again. The CSI 300 Index, which tracks the biggest companies traded on Shanghai and Shenzhen bourse, crashed 1.9 per cent for the steepest pullback since September amid bubble concerns. The gauge reached the highest level since 2008 earlier this week.

Major equity markets in Asia advanced on the back of an overnight jump in US technology stocks. Treasury yields dropped from its highest level since March, after the Federal Reserve officials doused speculations that the US central bank will trim its bond-purchase programme. President-elect Joe Biden is mulling a relief package worth about US$2 trillion, CNN reported.

“Our models are now pointing to recovery and an ‘early Spring’,” according to Johanna Kyrklund, chief investment officer and global head of multi-asset investment at Schroders. “We will still need governments’ stimulus to support us while we wait for the vaccine.”

The money manager is positive on equities and recommended shifting out the “stay at home stocks” that outperformed in 2020 into the more cyclical areas of the market, it said in a note to clients.

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In Hong Kong, Alibaba, the owner of this newspaper, advanced 5 per cent to HK$235 while WeChat operator Tencent gained 5.6 per cent to HK$629.50. The Trump administration dropped a plan to ban them and internet search engine Baidu, due to opposition from the Treasury department, according to Reuters and Dow Jones reports.

China’s biggest companies slammed by Trump’s sanctions rebounded further after the city’s HK$105.3 billion (US$13.6 billion) Tracker Fund said that it will resume buying sanctioned Chinese stocks, reversing an earlier decision.

CNOOC rallied 6.2 per cent to HK$8.18, a fourth day of gains. China Mobile rose 2.6 per cent to HK$47.15 and China Unicom added 2.6 per cent to HK$5.05.

The stampede marked the best start to a year since 2018. The Hang Seng Index has risen 4.65 per cent in the new year, and by more than 30 per cent from the depth of the slump in late March, raising questions about its endurance, especially with volatile fund inflows from mainland, while the city’s economy is still mired in a recession.

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Hong Kong’s gross domestic product likely shrank 6.1 per cent in 2020, according to an official estimate. Daily reports show the government is still fighting to contain some Covid-19 clusters, while the population remains lukewarm about vaccination plan.

On the mainland, the stocks that been the biggest gainers over the past year led losses. Kweichow Moutai dropped 1.4 per cent to 2,134 yuan. The liquor distiller said that a driver from Hebei province who visited its Moutai factory had Covid-19 infection. The province bordering Beijing is facing a viral outbreak.

Contemporary Amperex Technology, the manufacturer of lithium batteries for electric vehicles, sank 4.2 per cent to 369.01 yuan and solar wafer maker LONGi Green Energy Technology shed 6.7 per cent to 100.99 yuan.