Hong Kong’s index rises for the third day on hope that reopening of China border would bolster local economy

The Hang Seng Index advanced by as much as 1.4 per cent to 28,593.81

As many as 53 stocks in the benchmark advanced, led by large Chinese companies such as AAC Technologies Holdings and China Petroleum & Chemical Corporation, with declines led by Haidilao and Anta Sports

Reading Time:3 minutes

A screen marking the listing of Baidu on the Hong Kong stock exchange outside the Exchange Square complex in Hong Kong on Tuesday, March 23, 2021. Photo: Bloomberg.

Published: 10:57am, 18 May 2021Updated: 4:57pm, 18 May 2021

Hong Kong’s benchmark stock index advanced for the third day, amid optimism that two consecutive weeks of zero new local infections of the Covid-19 disease puts the city on track to seek to reopen its northern border with Shenzhen, which would bolster the local economy’s recovery.

The Hang Seng Index advanced 1.4 per cent to 28,593.81 on Tuesday, after rising by as much as 1.5 per cent in earlier trading. As many as 53 stocks in the benchmark advanced, led by large Chinese companies such as AAC Technologies Holdings and China Petroleum & Chemical Corporation, while Haidilao and Anta Sports Products fell. The China Enterprises Index, which tracks the performance of Chinese companies on the local bourse, rose by 1.4 per cent to 10,654.30.

Stock indexes on mainland China exchanges were mixed, with the Shanghai Composite Index rising by 0.3 per cent to 3,529,01, the key gauge on the technology-heavy Shenzhen exchange was almost flat, while ChiNext shed 0.7 per cent.

Hong Kong’s economy expanded 7.9 per cent in the first quarter, at a faster rate than expected. Some traders are hoping for zero local Covid-19 infections for two weeks, which will enable the city to reconnect to the mainland without quarantine requirements, as the city’s chief executive Carrie Lam said Hong Kong is within reach of the goal. An opening of the city’s borders with Shenzhen would allow more people to visit the city, extending a lifeline to a local economy that is heavily dependent on tourists and business travellers for income.

“Stocks in Hong Kong and mainland China are actually one [calendar] quarter ahead of the US market, so they are gradually rebounding even though stocks on Wall Street declined,” said Willer Chen, analyst at Forsyth Barr Asia in Hong Kong. “The outlook for the HSI will be driven by tech stocks’ results the rest of this month; their rebound could be paused if their results are unfavourable.”

Baidu and NetEase are scheduled to release their first-quarter financial results today, while JD.com is expected to report on Wednesday, Tencent on Thursday, and Meituan at the end of this month.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x