Alibaba, JD.com pace market rebound as Hong Kong pledges ‘maximum room’ to reopen borders, roll back Covid-19 curbs

Market sentiment improved as the city is said to be preparing to end quarantine requirements while a top health official downgraded virus threat
Chinese lenders maintained their key lending rates at this month’s setting to support businesses while China pledges to speed up infrastructure spending

Hong Kong stock market

Jiaxing Li

Published: 10:44am, 20 Sep, 2022

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Hong Kong stocks rebounded from a six-month low amid speculation the city will soon lift quarantine measures while a top health official downgraded the virus threat. Asian markets tracked overnight gains in US equities.

The Hang Seng Index jumped 1.2 per cent to 18,781.42 at at the close of Tuesday trading, the biggest gain in the six days, from the lowest point since mid-March. The Tech Index added 2 per cent while the Shanghai Composite Index rose 0.2 per cent.

Alibaba Group jumped 3 per cent to HK$86.20 and Tencent Holdings advanced 1.5 per cent to HK$293.40. Chinese EV makers also benefited from improved sentiment as Xpeng surged over 8.9 per cent to HK$62.10 and Nio gained 4.6 per cent to HK$162.50. Sands China and Galaxy Entertainment led winners among Macau casino operators, adding 7.7 per cent and 4.3 per cent each.

Stocks sustained gains after Chief Executive John Lee pledged to create “maximum room” to reconnect the city with the world. The government reached a consensus to ease quarantine rules, the Post reported earlier, while health adviser said Covid-19 has become a mild endemic. Beijing appears to endorse the move.

“It seems like the officials have been considering dropping the quarantine rules, which will be a huge boost to local economy, even the world,” said Dickie Wong, executive director of research at Kingston Securities. “The market still need to wait and see how it will be carried out.”

Chinese state newspaper seeks to talk up beleaguered stock market, citing buy-backs, improving economy

The pledge bolstered sentiment. Mainland media reports said China will step up infrastructure spending, while Chinese commercial banks voted to keep their key lending rates unchanged to aid businesses. The one- and five-year loan prime rates stayed at 3.65 per cent and 4.30 per cent.

China will accelerate the use of financial tools worth 300 billion yuan (US$42.8 billion) and speed up project construction to shore up the economy, state planner National Development and Reform Commission said on Monday. The pledge comes as the Communist Party prepares for its 20th National Congress in mid-October.

“China’s domestic economy is showing signs of slow recovery but still weak in absolute terms, so more stimulus measures are expected to stabilise growth,” analysts at ICBC Credit Susie said in a Tuesday research note.

Traders shrugged off concerns about higher borrowing costs that have spooked markets worldwide, as the Federal Reserve begins its rate-setting meeting this week, with expectations for at least a 75-basis point increase already baked in among market participants.

02:50

China orders Covid lockdowns and mass testing as nationwide case numbers surpass 1,000

The Hang Seng Index has dropped nearly 4 per cent so far this month, taking this year’s setback to about 20 per cent. The 73 index members have lost HK$934 billion (US$119 billion) in market value this month through Monday, according to Bloomberg data.

Limiting gains, Chinese real estate developer Country Garden slumped 2.6 per cent to HK$2.28 after S&P cut its credit rating by one level to BB from BB+ amid a prolonged recession in the domestic market.

Wuxi Chemical Equipment surged 30 per cent to 15.60 yuan in Shenzhen in the only stock debut onm Tuesday.

Stocks in South Korea added 0.5 per cent and those in Japan climbed 0.4 per cent, while Australian stock market jumped to 1.3 per cent, following a late-session rally of o. 6 per cent in US equities on Monday.