Hong Kong stocks climb out of bear market as Tencent, Meituan power recovery amid oversold signals

Hang Seng Index closed 1.1 per cent higher as technical gauges signalled the market was oversold and poised to rebound
Tencent, Meituan and Alibaba Health recouped some of last week’s big losses

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Iris Ouyang

Published: 10:35am, 23 Aug 2021

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Hong Kong stocks climbed from an almost 10-month low as traders bought Chinese technology stocks after the market‘s slump into bear-territory pushed their levels into a deeply oversold zone.

The Hang Seng Index rose 1.1 per cent to 25,109.59 on Monday, the most in two weeks. The benchmark dived 5.8 per cent last week to the lowest level since November 2. The Shanghai Composite Index climbed 1.5 per cent to 3,477.13, the biggest rally since August 2. Tech-heavy ChiNext jumped 3.2 per cent.

The Hang Seng Tech Index added 2.1 per cent. Tencent Holdings rallied 1.8 per cent to HK$433.20 and Meituan rose 1.1 per cent to HK$195.50. NetEase surged 5.7 per cent while Xiaomi gained 3.8 per cent.

The technical readings on both the Hang Seng Index and Hang Seng Tech Index dropped below the 30-point threshold on Friday, based on their 14-day relative strength indicators. That signalled the slide last week was overdone.

Today’s rebound was also supported by short covering as traders seek to close out their positions and return borrowed securities, said Carl Cai, analyst at SPDB International in Hong Kong. “But the sluggish investor sentiment hasn’t fundamentally changed as they are still worried about regulatory uncertainties.”

Healthcare-related stocks saw large gains with WuXi Biologics soaring by 7.5 per cent and Alibaba Health Information Technology surging by 6.1 per cent. CSPC Pharmaceutical Group added 3.6 per cent. They slumped as a group last week because of concerns over regulatory crackdown.

Alibaba Holding Group, the owner of this newspaper, lost 3.5 per cent to HK$152.10, a new all-time low. The Communist Party said its party chief in Hangzhou city, home to the e-commerce giant, is being probed for disciplinary violations. Separately, a mainland media report said Alibaba Cloud had leaked user information without consent, the company said it already dealt with the complaint that first emerged in November 2019.

Evergrande New Energy Vehicle plunged by 27 per cent. Xiaomi on Friday denied speculation it would take over the troubled Shenzhen-based developer’s EV manufacturing unit. China Evergrande Group lost 12.4 per cent while Evergrande Property Services Group fell 9.1 per cent.

China Overseas Land & Investment fell 1 per cent to HK$17.80. The nation’s sixth largest developer by sales expected sales growth to decelerate through December amid tighter financing and curbs to rein in market speculation and home prices. Its net profit rose 1.2 per cent in the first half while interim dividend was unchanged at HK$0.45 per share.

China Mobile aims to raise US$8.6 billion in mainland’s biggest IPO for over a decade

In mainland, China Telecom plunged by the daily cap of 10 per cent in Shanghai, after recording a 34 per cent jump in its debut on Friday.

New listings in the mainland surged. Sinostone Guangdong surged 44 per cent to 45.60 yuan while Puya Semiconductor Shanghai more than tripled to 485.10 yuan.

US stock futures rose ahead of a monetary policy symposium of the Federal Reserve as traders await signals on the timetable of scaling back stimulus.

“It’s also a crucial time for global assets, as the US is inching closer to tapering its quantitative easing,” said Cai of SPDB, “The period of sharp drop [in the Hong Kong market] should be over, but the market still hasn’t bottomed out.”