Hong Kong stocks climb from 2-month low as Beijing’s ban on Micron Technology propels rally in Chinese chip makers

The Chinese government said Micron’s products posed a national security risk and would be banned from sale to information infrastructure operators
China’s Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor surged as traders piled in to local microchip firms

Hong Kong stock market

Jiaxing Li

Published: 10:34am, 22 May 2023

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Hong Kong stocks climbed from a two-month low on Monday as Beijing’s ban on Micron Technology propelled a rally in Chinese chip makers.

The Hang Seng Index jumped 1.2 per cent to 19,678.17 at the close of trading, the biggest gain in a week. The Hang Seng Tech Index gained 2.1 per cent, and the Shanghai Composite Index, mainland China’s benchmark, added 0.4 per cent.

Tencent Holdings climbed 2.1 per cent to HK$340.20, Alibaba gained 1.4 per cent to HK$83.60. Wuxi Biologics surged 5.7 per cent to HK$44.55 and Alibaba Health jumped 4.7 per cent to HK$4.90. Electric car maker BYD gained 3 per cent to HK$251.40.

China’s chip champion, Semiconductor Manufacturing International Corporation, jumped 1.2 per cent to HK$21.05 while Hua Hong Semiconductor climbed 0.9 per cent to HK$27.25 as traders piled in to local microchip firms.

In the latest flare-up of tensions between the two economic giants, the Chinese government said on Sunday that US memory chip company Micron Technology’s products posed a national security risk and would be banned from sale to China’s key information infrastructure operators.

“Micron’s business in China may be affected, and customers will shift to other domestic or foreign suppliers,” Citic analyst Xu Tao said in a note on Monday, adding that he’s optimistic about investment opportunities in the memory chip industry as “domestic replacement” accelerates.

Elsewhere, China’s one-year loan prime rate (LPR) was kept unchanged at 3.65 per cent on Monday, according to the website of the Chinese central bank.

“Despite the April weakness [in economic data], we do not expect policymakers to unleash major stimulus as the 5 per cent GDP growth target is still well within reach and issues such as property risks and youth unemployment require a more targeted approach,” Goldman Sachs economists including Hui Shan said in a note on Sunday.

Meanwhile, Hong Kong Exchanges and Clearing (HKEX), operator of the city’s bourse, said it will introduce yuan share trading from June 19. Securities traded through the new counters will be of the same class and their holdings will be transferable without a change in beneficial ownership, HKEX said.

Other major Asian markets were mixed early on Monday. South Korea’s Kospi jumped 0.8 per cent and Japan’s Nikkei 225 jumped 0.9 per cent, while Australia’s S&P/ASX 200 rose retreated 0.2 per cent.

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