Hong Kong stocks advance in May as Meituan’s $17.5 billion rally counters China manufacturing data, yuan weakness

Hang Seng Index erased losses in late trading after earlier data showing a slower gain in Chinese manufacturing

Meituan surged 10.9 per cent in a US$17.5 billion one-day rally after its first-quarter revenue beats market estimates

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People cross the street beneath a jumbo screen showing the latest stock and currency exchange data in Shanghai in October last year. Photo: EPA-EFE

Published: 10:46am, 31 May 2021Updated: 5:33pm, 31 May 2021

Hong Kong stocks rose for a second month, propelled by the biggest rally in Meituan in more than a year after a bullish earnings report. The surge overshadowed data showing China’s manufacturing slowed and authorities took steps to weaken the yuan.

The Hang Seng Index advanced by 1.5 per cent from a month ago, ending a streak of losses in May in five of the past six years. The benchmark gained 0.1 per cent to 29,151.80 in Monday trading, reversing an earlier slide of as much as 0.7 per cent. The Shanghai Composite Index declined 0.4 per cent, limiting its monthly advance to 4.9 per cent.

Meituan jumped 10.9 per cent to HK$294 in the stock’s biggest one-day increase since March 20 last year, after a late-Friday report showed first-quarter revenue beat market estimates. The rally boosted its market value by US$17.5 billion.

Sentiment remained skittish after China’s manufacturing purchasing managers’ index (PMI) suggests growth momentum may have already peaked. China’s state-run media also began to talk down the currency after it reached the strongest level against the US dollar in three years. That may put in peril a rebound in Hong Kong’s benchmark from a May 13 low.

Major markets in the Asia-Pacific region were mixed, with traders continuing to assess global inflation risks even as China seeks to stymie a commodity rally. The US will report non-farm payrolls later this week in a key update on the pulse of the economy.

“It still feels like a market looking for direction in the face of uncertainty around the interplay between much-feared inflation and much hoped-for growth recovery,” said Patrik Schowitz, a strategist for global multi-asset at JPMorgan Asset Management. “Perhaps it’s not too surprising given that a lot of recovery is already priced into risk assets and markets now have to price in the rolling peak in growth acceleration around the world.”

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