Hong Kong stocks advance as Tencent, Alibaba, Galaxy catapult market to winning start in Year of the Dragon

Hang Seng Index erases all of 1.2 per cent decline as the Year of the Dragon kicks in, following a record 29 per cent slide in the Year of the Rabbit

MSCI to remove 66 Chinese stocks from its Global Standard indices from next month, while three stocks will exit from the MSCI Hong Kong Index

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Financial executives at the Hoing Kong stock exchange to welcome the first day of trading in the Year of the Dragon on February 14, 2024. Photo: Mia Castagnone

Published: 10:38am, 14 Feb 2024Updated: 4:40pm, 14 Feb 2024

Hong Kong stocks advanced as trading resumed after the Lunar New Year holiday, giving the Year of the Dragon an auspicious start. Gains in industry leaders like Tencent and Alibaba Group overcame early jitters caused by index provider MSCI’s decision to cut dozens of Chinese stocks from its benchmark indices.

The Hang Seng Index jumped 0.8 per cent to 15,879. 38 on Wednesday, erasing a drop of as much as 1.2 per cent as financial markets reopened after a two-day break. The Tech Index rallied 2.2 per cent. Markets in mainland China are closed for the entire week for the holiday.

Tencent jumped 1 per cent to HK$290 while Alibaba Group added 2.2 per cent to HK$70.80 and Meituan surged 5.6 per cent to HK$71.10. Casino operator Galaxy Entertainment soared 3.5 per cent to HK$44.35, and Trip.com surged 4.4 per cent to HK$317.20 on bets Lunar New Year holidaymakers will lift their businesses.

The turnaround gave the Year of the Dragon a promising start. Since its inception, the city’s benchmark index has never had a losing year during the zodiac year, according to Bloomberg data, with gains ranging from 0.5 per cent to 33.4 per cent.

The Year of the Rabbit, which ended on February 9, was a miserable one for the local market as the Hang Seng Index slumped by a record 29 per cent.

Financial markets may be boosted by tailwinds such as potential interest rate cuts in Europe and the US, Financial Secretary Paul Chan Mo-po said during an event at the stock exchange on Wednesday. China’s economy “is stable and improving,” he said, adding that these factors together “will bring a positive atmosphere to investment sentiment and the asset market.”

Local stocks had earlier suffered a setback in the opening hours. MSCI deleted 66 Chinese stocks from its Global Standard indices in its February review in the biggest cut in at least two years, while adding five new members, it said on Monday. India gained most from the revision among Asia-Pacific companies, as five new stocks joined the benchmarks.