Alibaba, Tencent, Meituan jump, defying Hang Seng slump as market ignores Covid-19 vaccine developments

Hong Kong stocks slipped as concerns over rising coronavirus cases globally tempered optimism surrounding the development of additional coronavirus vaccines. Technology giants, however, bucked the trend, clawing back some of their losses following an overnight rally in the US.

The Hang Seng Index dipped 0.2 per cent to 26,169.38. The benchmark fell 0.3 per cent on Wednesday from a four-month high. The Shanghai Composite Index slipped 0.1 per cent for its third consecutive days of declines.

Italy, one of the European countries hit hardest by Covid-19, crossed the one-million infections mark on Wednesday, according to a tally by Johns Hopkins University. And Britain became the fifth country in the world to record more than 50,000 coronavirus-related deaths. More than 51.9 million people around the world have been reported to be infected by the novel coronavirus globally and over 1.28 million have died.

“For stock market concerns, I would think that the negative from the current wave of Covid, no matter how bad this wave is, will eventually be overpowered by the positive of vaccine optimism because the recent surge is temporary,” said Stephen Innes, chief global markets strategist at Axi.

He added that challenges remain as a vaccine will not come soon enough to inoculate the world from the current spike in Covid-19 cases.

Chinese vaccine developers were mixed after seeing early gains.

China National Pharmaceutical Group slipped 0.6 after gaining as much as 2.1 per cent. The company said late on Wednesday that data from large-scale, late-stage clinical trials of its unit’s Covid-19 vaccines were “better than expected”.

The company said that its affiliate China National Biotec Group had moved two vaccine candidates into phase three clinical trials outside China in countries including the United Arab Emirates, Bahrain, Egypt and Argentina involving more than 50,000 participants in total, and the trials were nearing their end.

Shanghai Fosun Pharmaceutical gained 1.5 per cent, paring early gains of 4.9 per cent. The company said it had received approval to begin clinical trials in China of the vaccine developed by Pfizer and its German partner BioNTech, which was more than 90 per cent effective, the company said in an exchange filing on Thursday.

Another Chinese company, Sinovac Biotech, was allowed to resume clinical trials of its CoronaVac vaccine by Brazil’s national health regulator on Wednesday less than 48 hours after being halted, amid criticism the initial pause was politically motivated.

Traditional economy stocks such as banks and property developers fell after China’s new bank loans declined 64 per cent month on month in October, said Alan Li, portfolio manager at Atta Capital.

Lenders issued 689.8 billion yuan (US$104.3 billion) in new loans last month, data from the People’s Bank of China showed on Wednesday, down from 1.9 trillion yuan in September and falling short of analysts’ expectations.

“A drop in new Chinese bank loans not only puts pressure on financials, but also stocks in the property sector which are especially sensitive to liquidity,” said Li.

China Resources Land was the top decliner among property companies, shedding 3.8 per cent, while China Overseas Land & Investment dropped 3.7 per cent.

Among banks, Hang Seng Bank was the biggest loser, easing 3 per cent, while HSBC Holdings dropped 2.3 per cent.

Tech stocks rebounded after losses in Chinese technology trio Alibaba, Tencent and Meituan snowballed to US$254 billion over the past two days on antitrust concerns. The Hang Seng Tech Index of 30 top technology companies rose 3.2 per cent. Overnight, the Nasdaq closed up 2 per cent as investors switched back to technology stocks.

Alibaba, the owner of this newspaper, gained 1.9 per cent to HK$253, while benchmark heavyweight Tencent rose 4.7 per cent to HK$577. Meituan added 5.8 per cent to HK$286.80.

Chinese chip maker Semiconductor Manufacturing International Corporation added 1.8 per cent. The company reported net profit for the third quarter increased 122.7 per cent year on year to US$256.4 million, on the back of record high revenues and increasing demand for smartphones and smart home products for which it supplies chips.

Two stocks started trading after their initial public offerings in the mainland. Machine automation supplier Kinco Automation Shanghai jumped 180.5 per cent to 57.05 yuan from its IPO price of 20.34 yuan in Shanghai. Dnake Xiamen Intelligent Technology, which produces security intelligent equipment, gained 208 per cent to 76.60 yuan from its listing price of 24.87 yuan in Shenzhen.