CNOOC, Chinese banks power Hong Kong stock rebound before earnings season as confidence recovers

Xi Jinping opened the Communist Party’s congress on Sunday touting its zero-Covid policy and warned of ‘dangerous storms’ amid challenges from the US
CNOOC advanced after saying earnings for the nine months to September likely doubled on the back of higher oil prices

Hong Kong stock market

Jiaxing Li

Published: 10:41am, 17 Oct 2022

Why you can trust SCMP

Hong Kong stocks erased losses after a rally in CNOOC fanned by a surge in corporate earnings as the new quarterly reporting season kicked in, while Chinese state-controlled lenders gained amid vows to support the economy.

The Hang Seng Index rose 0.2 per cent to 16,612.90 at the closing of Monday trading, after sliding as much as 1.7 per cent. The Tech index retreated 0.2 per cent, trimming a more than 3 per cent slump. The Shanghai composite index advanced 0.4 per cent to overturn a 0.6 per cent setback.

CNOOC surged 1.9 per cent to HK$9.84 after signalling a more than doubling in earnings in its impending nine- month results, citing gains from higher crude oil prices. Hansoh Pharma surged 13.2 per cent to HK$13.20.

Bank of China and Industrial & Commercial Bank of China rose by more than 1.6 per cent, while the Construction Bank climbed 0.3 per cent. The nation’s top lenders pledged to support the real economy, the Securities Times reported, after writing more new loans in September to underpin a stronger-than-expected jump in credit impulse.

Market confidence is now “neutral to contrarianly positive” with a better monetary environment, Hong Hao, market strategist and chief economist at Grow Investment Group, said in a research note on Sunday.

Major tech stocks slumped in the opening trading hours after Chinese President Xi Jinping doubled down on stringent Covid0-19 control on Sunday at the 20th National Congress, and also warned of “dangerous storms” ahead while it fosters new economic growth engines.

The Chinese leader placed a “similar level of emphasis on growth and somewhat less on market and reform,” versus his speech five years ago, Goldman economists said in a report. “Will there be a material shift towards more growth-oriented policies following the Congress? We are likely to have to wait longer for clarity.”

06:23

Xi Jinping charts China’s future course at 20th party congress

Alibaba Group weakened 0.1 per cent to HK$73.20, Tencent lost 0.8 per cent to HK$247.20, while JD.com tumbled 1.7 per cent to HK$171.90. Electric-car makers fell, with Xpeng and Nio and Li Auto sliding about 4 per cent to 5.1 per cent. Top apparel maker Li Ning crashed 4.3 per cent to HK$55.55. All narrowed their declines.

The Hang Seng Index slipped 6.5 per cent last week in the market’s biggest setback since mid-July. The index has tumbled about 28 per cent this year through last week, erasing HK$6.3 trillion (US$802.5 billion) of market capitalisation.

Elsewhere, China’s central bank kept the interest rate unchanged at 2.75 per cent on 500 billion yuan (US$69.55 billion) worth of one-year medium-term lending facility (MLF) loans to simulate the faltering economy, today’s operations showed.

A government report later this week may add to worries about China’s economic slowdown. The nation’s exports probably grew 4 per cent in September, slowing from a 7.1 per cent pace in August, according to consensus among economists tracked by Bloomberg.

Rego Interactive, a marketing service provider, surged 103 per cent to HK$1.30 per share on its first trading day in Hong Kong. Benchmarks in Japan and Australia both slipped more than 1 per cent, while the Kospi index in South Korea added 0.3 per cent.

Post