Hong Kong stock market starts the week strong as surging tech shares overcome China’s slowing recovery and fears about Reddit traders’ assault on hedge funds

The Hang Seng Index advanced more than 2 per cent on Monday, even as data signalled a slowdown in China’s economic recovery

Meituan, Tencent led the gains, soaring by 10 per cent and 4.5 per cent respectively

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Investors are watching developments in the battle between retail investors and professional hedge funds, which started in the US and spread to other markets aided by rallying calls on Reddit. Photo: AP

Published: 11:13am, 1 Feb 2021Updated: 5:16pm, 1 Feb 2021

Hong Kong stocks started the week higher as surging technology shares overcame a slowdown in China’s economic recovery and wider market concerns about the havoc created by retail investors taking on hedge funds in the US.

The Hang Seng Index rose 2.2 per cent to 28,892.86 on Monday, after capping its first weekly loss of 2021 on Friday. The rally snapped four consecutive daily declines.

The Shanghai Composite Index, mainland China’s benchmark gauge, added 0.6 per cent to finish at 3,505.28.

Tech companies, which had dipped in the previous few trading days, led the gains among blue chip stocks. Online food delivery giant Meituan was the runaway winner, rising 10 per cent to HK$391. Tencent Holdings jumped 4.5 per cent to HK$712.50, while Xiaomi rose 2.2 per cent to HK$29.85. The Hang Seng Tech Index, which has 31 constituents, surged 4.4 per cent.

Tech stocks have benefited from record high levels of capital raised by mainland Chinese funds looking for stocks for new investment portfolios. Mainland traders spent HK$12.5 billion (US$1.6 billion) buying Hong Kong stocks on Friday, a 28th straight day of net inflows, according to Bloomberg data. Net purchases totalled HK$310.6 billion in January. Net inflows into Hong Kong today reached HK$7.85 billion, data from Bloomberg show.

“Southbound funds continue to flow in, which is a big help for the market,” said Alvin Cheung, associate director at Prudential Brokerage in Hong Kong. “The market has lost around 2,000 points during the previous five trading days, and such low levels of stock prices are quite attractive for investors.”