Hong Kong stocks slip as Xiaomi’s ‘BIG NEWS’ teaser fails to inspire with markets focused on inflation, rate outlook

Hang Seng Index fell 0.4 per cent while markets in the region were mixed while Japanese stocks slumped
Xiaomi pared gains after teasing investors with a ‘BIG NEWS’ posting on local Weibo platform, only to disappoint by indicating a new product launch

Stocks

Martin Choi

Published: 11:00am, 22 Mar 2021

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Hong Kong stocks extended losses from last week amid concerns about inflation and global central bank policy direction. A sharp gain in Chinese smartphone maker Xiaomi Corp petered out as its ‘BIG NEWS’ teaser disappointed traders.

The Hang Seng Index slipped 0.4 per cent to 28,885.34, swinging between a 0.5 per cent gain and 0.7 per cent loss. The benchmark sank 1.4 per cent on Friday, the most in a week. Stocks in mainland markets advanced, with the Shanghai Composite and the CSI 300 Index both adding more than 1 per cent to stem a slump over the past four weeks.

Sunny Optical led losses in Hong Kong, falling 5 per cent to HK$181.80, while Budweiser Brewing Company dropped 3.9 per cent to HK$23.65. Power tools maker Techtronic Industries fell 3.7 per cent to HK$126.30.

Xiaomi had surged as much as 4.2 per cent to HK$27.35, after founder Lei Jun and the company both teased investors with an impending “BIG NEWS” social-media posts on Weibo on Sunday.

The stock, which carries a 3 per cent weight in the Hang Seng Index, pared gains to 1.9 per cent to close at HK$26.75 after the company followed up with a new post on Monday, indicating a new product launch scheduled for March 29.

Speculation is rife that the phone maker would formally set up a project to assemble electric vehicles. Xiaomi said in an exchange filing last month that it has been “paying attention to the developments in the electric vehicle industry.” Xiaomi is one of the backers of Chinese EV start-up Xpeng.

Volatility in the US government bond market in recent weeks has unsettled stock traders as markets questioned the Federal Reserve’s dovish stance amid economic recovery and inflation momentum. Benchmark 10-year Treasury yield eased 5 basis points after surging 10 basis points to 1.72 per cent last week.

“Equities face some near-term risks stemming from the recent rise in bond yields,” Peter Berezin
chief global strategist at BCA Research, said in a March 19 report. “Nevertheless, stocks will shrug off their losses provided that bond yields do not rise to a level that chokes off economic growth. With the Fed still on hold, we do not expect that to happen any time soon.”

Markets in the Asia-Pacific were mixed. Japan’s Nikkei 225 fell 2.1 per cent, while South Korea’s Kospi slipped 0.1 per cent. Australia’s S&P/ASX 200 gained 0.7 per cent.

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In Shanghai, China Tourism Group Duty Free gained 1.7 per cent to 311.65 yuan, while China Merchants Bank rose 3.9 per cent to 53.78 yuan.

Four companies began trading for the first time on mainland bourses.

In Shanghai, Jiangsu Changling Hydraulic, which manufactures and distributes machinery hydraulic parts, rose 44 per cent to 56.74 yuan from its IPO price of 39.40 yuan. Jiangsu Tongli Risheng Machinery, which produces escalator parts, also gained 44 per cent to 21.72 yuan from its offer price of 15.08 yuan.

In Shenzhen, telecommunication service provider Wuxi Online Offline Communication Information gained 191.5 per cent to 119.50 yuan from its IPO price of 41 yuan. Chutian Dragon, which produces high-end smart cards, rose 43.9 per cent to 6.65 yuan from its listing price of 4.62 yuan.

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