Hong Kong stocks snap back-to-back losses as UBS sees return of confidence in economy

Hang Seng Index gained on the back of an official report signaling the city’s economy is recovering from its worst recession on record

Mainland China markets remain shut through Wednesday for Labour Day break

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Shoppers crowd Festival Walk shopping mall in Kowloon Tong, Hong Kong in September 2020. UBS likes market laggards as confidence and retail sales rebound. Photo: Felix Wong

Published: 10:25am, 4 May 2021Updated: 11:08pm, 4 May 2021

Corrected [3:05pm, 4 May, 2021]

[3:05pm, 4 May, 2021]
Corrects Xiaomi stock price move in third paragraph, updates stock indices throughout

Hong Kong stocks rebounded from their worst back-to-back losses in six weeks as the city’s economy grew last quarter by more than economists predicted, buoying risk appetite.

The Hang Seng Index rose 0.7 per cent to 28,557.14. The index had slipped more than 3.2 per cent over the previous two sessions, the worst streak since March 24. Markets in mainland China remain shut until Wednesday for Labour Day.

Sinopec led gainers among blue chips, rising 4.1 per cent to HK$4.08, while PetroChina added 3.5 per cent to HK$2.92 as oil rallied for two days to above US$65 a barrel. Chinese apparel producer Anta Sports rose 3.1 per cent to HK$142.70, while smartphone maker Xiaomi added 1.4 per cent to HK$24.80.

The city’s economy expanded 7.8 per cent from a year ago when it sank 9.1 per cent at the outset of Covid-19 pandemic, according to an advance estimate published by the statistics department late Monday. It was the fastest in 11 years, and exceeded consensus for a 3.7 per cent gain in a Bloomberg survey.

“We believe the growth recovery provides room for the government to focus more on other tasks,” William Deng, North Asia economist at UBS said in a note to clients on Tuesday. “In the near term, the most important task is to effectively combat Covid-19 and reduce the risk of another local wave.”