Hang Seng Index marks best start to year since 2011 as banks and insurers rally while Xiaomi plunges
- Hong Kong markets completed a third week of gains, lifting the benchmark index to highest level before the Wuhan lockdown a year ago
- Xiaomi crashed by a record 10 per cent on US sanctions, while insurer AIA Group and Chinese bank stocks pushed the market to its best opening two weeks of year since 2011
The Hang Seng Index rose 0.3 per cent at 28,573.86 for a 2.5 per cent gain from a week ago as the market capped its best start to a year in a decade. The Shanghai Composite Index erased a 0.5 per cent loss to end little changed at 3,566.38.
Xiaomi earlier plunged to an intraday low of HK$28.25 before closing at HK$29.30 or 10.3 per cent below Thursday’s closing. The slump wiped out HK$66.7 billion (US$8.6 billion) of market value from the phone company. The stock carries a 3.5 per cent weight, making it the ninth largest constituent in the main index, and has the fifth-largest 4.5 per cent weight in the local Composite Index.
Bank stocks jumped as investors switched to safer bets. Postal Savings Bank of China surged by 8.4 per cent in Shanghai and 10.2 per cent in Hong Kong while Industrial and Commercial Bank of China and rival China Construction Bank climbed by 1.6 and 2.1 per cent respectively. AIA Group, the biggest Hang Seng constituent, jumped 3.7 per cent to HK$104.40.
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Li Lu, influential investor and founder of Himalaya Capital, bought TKTK billion shares, or a 5.06 per cent stake, in Postal Savings Bank, according to local media reports. China Merchants Bank, Industrial Bank and Ping An Bank surged to record highs on mainland bourses.
“I’m not that worried about the sanctioned companies, either supported or not supported [by mainland funds], as long as fundamentally they are good companies, all people are going to own them,” said Bhaskar Laxminarayan, chief investment officer for Asia-Pacific at Bank Julius Baer. “Fundamentals play out in this kind of environment,’’ he said on a teleconference on Friday, adding that the impact is even shorter given the rapid flow of information and funds.
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Markets were subdued elsewhere in Asia. South Korea’s Kospi fell 2 per cent and the Nikkei 225 lost 0.6 per cent. S&P ASX200 in Australia was almost flat.
On the mainland, a number of blue chips plunged amid concerns on valuations as state media criticised funds flocking to certain popular stocks and sectors. Wuxi AppTec lost 1.6 per cent in Shanghai. Foshan Haitian Flavouring & Food shed 4.8 per cent.
New listings in Hong Kong were mixed. Modern Chinese Medicine Group added 6.8 per cent to HK$1.26 while Cheshi Holdings surged 22 per cent to HK$1.50 and Strawbear Entertainment Group soared 83.7 per cent to HK$10.80. Roiserv Lifestyle Services dipped 8.2 per cent to HK$12.36.