Alibaba, Geely lift Hong Kong stocks on China stimulus bets as Xi pledges to achieve 5.5 per cent growth target
- Xi pledged to achieve the national growth target of 5.5 per cent despite doubts among economists and investment banks after losses induced by Covid-19 lockdowns
- Geely Auto led auto stocks higher while NetEase and Alibaba logged big gains as traders counted on policy support to drive corporate earnings
Hong Kong stocks rose as traders bet China will step up economic stimulus to shore up growth and business confidence after President Xi Jinping pledged to meet the annual growth target this year.
The Hang Seng Index gained 1.3 per cent to 21,273.87 at the close on Thursday. The Hang Seng Tech Index added 2.3 per cent, while the Shanghai Composite Index advanced 1.6 per cent.
Geely Automobile and BYD surged more than 4 per cent for the biggest gains on the benchmark after the State Council said China may extend the tax break on electric-car purchases. Alibaba Group Holding added 6.4 per cent to HK$108 and NetEase jumped 2.3 per cent to HK$142.40.
“The market will face a favourable policy front through year-end, with the government stressing stability in growth, employment and consumption,” said Zhou Zhengfeng, an analyst at Nanjing Securities. “That will help sustain the stock rebound, though the road will be bumpy.”
China will strive to meet the growth target for 2022 by adjusting its macro policy and implementing more effective measures, Xi said in a virtual keynote speech at a business forum on Wednesday.
The world’s second-largest economy expanded 4.8 per cent in the first quarter, and probably slowed to 2.6 per cent this quarter based on consensus estimates tracked by Bloomberg. China is targeting about 5.5 per cent growth in 2022.
The statement fuelled optimism policymakers will take more action to revive activity and repair business and consumer confidence following losses inflicted by lockdowns in Shanghai and 40-odd mainland cities earlier this year.
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Hong Kong’s blue-chip stocks have recovered more than US$500 billion of value since a mid-March slump. Citigroup predicts the Hang Seng Index will climb as much as 16 per cent in the second half as policy stimulus aids a corporate earnings rebound while progress on more effective vaccines temper lockdown risks.
Still, concerns about capital flight may hamper performance. The Hong Kong Monetary Authority has intervened in the currency market again, taking its 14 moves this year beyond HK$100 billion, after the local dollar hit the weaker end of its trading band yet again.
Tesla car-battery supplier Contemporary Amperex Technology rallied 5.9 per cent to 536.97 yuan in Shenzhen. The world’s largest lithium-ion battery maker for EVs raised 45 billion yuan (US$6.7 billion) from a private stock offering to fund expansion and research, it said in a filing late on Wednesday.
Other major markets in Asia-Pacific were mixed. Federal Reserve chairman Jerome Powell acknowledged the risk of economic recession in a testimony to lawmakers and said it would be very challenging to engineer a soft landing.