Hong Kong stocks rebound from taper tantrum sell-off as benchmark index gets biggest revamp since 1969 inception
- Three new Hang Seng Index members – Alibaba Health, Longfor and Haidilao – rally before they officially join from March 15
- Hang Seng Indexes unveils plan to increase benchmark index membership to 80 next year, and 100 eventually in biggest makeover since inception
The Hang Seng Index climbed 1.6 per cent to 29,452.57 at the close on Monday. The gauge tumbled 5.2 per cent last week for the steepest loss since March 13, after US government bond yields jumped to a one-year high on policy tightening angst.
The Shanghai Composite Index added 1.2 per cent, brushing aside a Sunday report showing a decline in China’s official manufacturing index in February as the Lunar New Year holiday affected production.
Meituan, Anta Sports Products and Wuxi Biologics were the biggest index gainers, rising by at least 6.5 per cent. Alibaba Health Information Technology, Haidilao International and Longfor Group rose by 3.7 per cent to 9.4 per cent, after they were added to the benchmark in a review. They will officially join on March 15.
“As the global economy has not fully recovered to the pre-Covid-19 level, the pace of policy normalisation this year is likely to be modest,” said Wendy Liu, head of China strategy at UBS Group. “Marginal monetary policy tightening may lead to market corrections, but the probability of triggering systemic risk is low.”
It could take investors some time to re-price domestic policy normalisation, a global economic recovery and rising global rates, she said in a report to clients.
Market sentiment stabilised across the Asia Pacific region. Benchmarks in Australia and Japan advanced by 1.7 per cent to 2.4 per cent, and futures on the S&P 500 Index rose 0.8 per cent.
The Reserve Bank of Australia said it would boost the purchase of longer-dated debts to keep yields lower. President Joe Biden’s US$1.9 trillion relief package was approved by the Senate over the weekend, while Federal Reserve Chairman Jerome Powell reiterated policy will remain supportive to spur the economy.
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SCMP Explains: Hong Kong’s Tracker Fund
Hang Seng Indexes Co, the local index compiler, unveiled the results of its public consultation to overhaul its family of gauges after the market close on Monday.
From June next year, it will increase the number of constituents to 80, and to 100 eventually, it said in an announcement on Monday. Other measures include widening the industry groups to seven, relaxing listing requirements before inclusion eligibility and capping the weighting of individual stock to 8 per cent.
Elsewhere, China Mengniu Dairy gained 1.5 per cent to HK$43.05 after Danone said it plans to sell its effective 9.8 per cent stake in the Chinese company and return cash to shareholders.
CNOOC retreated 1.1 per cent to HK$9.15 after the New York Stock Exchange decided to delist the American depositary receipts of the Chinese offshore oil producers from next week, citing a US executive order from Trump era.
In Shenzhen, Suning.com surged by the 10 per cent daily limit to 7.70 yuan, after state-owned Shenzhen International Holdings and Shenzhen Kunpeng Equity Investment Management agreed to acquire 23 per cent of the troubled retailer for 14.8 billion yuan (US$2.28 billion).
