Hong Kong stocks rebound from near 21-month low as tech sell-off, cheap valuations lure investors

Name: Hong Kong reimposes tough Covid-19 restrictions in bid to ward off fifth pandemic wave
Uploaded: 2022-01-06T02:45:38.000Z
Duration: 4 min 19 s
Description: Hong Kong reimposes tough Covid-19 restrictions in bid to ward off fifth pandemic wave

The Hang Seng Index closed stronger with investors scooping up battered tech stocks after a US$71 billion sell-off on Wednesday

Alibaba led recovery, having lost almost half its value in 2021, as the Tech Index overturned a 1.7 per cent slide

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An empty restaurant at lunch time in Hong Kong on 15 July 2020. Photo: Xiaomei Chen

Zhang Shidong

Published: 10:45am, 6 Jan 2022Updated: 5:58pm, 6 Jan 2022

Hong Kong stocks rebounded from near a 21-month low as traders sought bargains in battered Chinese tech companies on valuation appeal, even as the city’s reimposed of tough social-distancing measures to stem Covid-19 cases.

The Hang Seng Index gained 0.7 per cent to 23,072.86 at the close on Thursday, reversing an earlier decline of as much as 0.9 per cent to the lowest level since April 2020. The Tech Index rallied 1.4 per cent, overturning a 1.7 per cent slide. The Shanghai Composite Index fell 0.3 per cent.

Stocks had earlier declined in tandem with a global market sell-off on interest-rate fears, pushing the local market to its worst start to a year since 2005. The sell-off in tech stocks, triggered by a Tencent’s divestment, erased US$71 billion from the 30 members of the Hang Seng Tech Index on Wednesday.

“It’s possible that Hong Kong stocks are already near the bottom as the valuations are pretty attractive,” said Xue Wei, analyst at Ping An Securities. “But stocks are still volatile in the short term.”

Alibaba Group, the owner of this newspaper, jumped 5.7 per cent as the biggest index gainer. The stock price almost halved last year. Tencent rose 1.5 per cent, while Meituan and JD.com, both partly owned by the WeChat operator, gained at least 3.6 per cent.

04:19

Hong Kong reimposes tough Covid-19 restrictions in bid to ward off fifth pandemic wave

Markets in Asia-Pacific were broadly lower. The Nikkei 225 Index in Japan dropped by more than 1 per cent, tracking an overnight pullback in US equities. Minutes from the Federal Reserve’s previous meeting signalled a quicker unwinding of monetary stimulus. Ten-year Treasury yield rose to the highest since April.

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