Macau casino stocks keep alive Hong Kong market’s longest winning run in five weeks, as trading volume sags before holiday

Hong Kong stocks rose for a fourth day on Friday, pushing the benchmark index to its longest winning streak in five weeks. Macau’s casino operators rallied on optimism that their gambling concessions will be extended next year.

The Hang Seng Index rose 0.1 per cent to 23,223.76 at the close of trading, adding to its best momentum since a six-day rally in mid-November. The Hang Seng Tech Index declined 0.3 per cent, while China’s Shanghai Composite Index lost 0.4 per cent.

Sands China jumped 4.7 per cent, Galaxy Entertainment added 2.1 per cent and MGM China surged by 7.2 per cent. Most participants at a public hearing in the world’s biggest gambling hub suggested keeping the current six licences, according to reports from investment banks including Sanford C. Bernstein.

That injected confidence among investors that the six existing operators will be able to renew their concessions when they expire in June next year. Casino stocks had earlier slumped amid a regulatory overhaul, as China seeks to diversify Macau’s economy from its reliance on gambling revenue.

Trading in Hong Kong’s equity market ended at noon ahead of the festive season. It will be shut on December 27 for a public holiday. The daily trading volume on Friday was 67 per cent below its 30-day average, according to Bloomberg data.

Elsewhere, heightened US-China tensions limited stock gains. President Joe Biden signed into law a measure that will effectively ban all imports from Xinjiang for alleged use of forced labour. Xinjiang, mostly populated by the Uygur ethnic minority, is a major producer of cotton as well as polysilicon, which is used in solar panels.

Xinyi Glass sank 2.1 per cent and Xinyi Solar slipped 0.8 per cent on Friday.

“We expect Hong Kong stocks to bottom out in the following month,” said Cliff Zhao, a strategist at CCB International in Hong Kong. “Investors should build up positions on stocks with attractive valuations and high dividend yields, such as utilities, banks and infrastructure.”

Despite this week’s rebound, the Hang Seng Index remained 15 per cent weaker this year, making it the worst-performing major benchmark globally. Members of the index trade at 11.9 times projected earnings, the cheapest after Brazil, Bloomberg data showed.

Four companies that began trading for the first time on mainland Chinese bourses all rose on Friday. Chip maker Focuslight Technologies jumped 145 per cent in Shanghai while chemical producer Jiujiang Shanshui Technology rose by 35 per cent in Shenzhen.

Other major markets in Asia-Pacific, except Japan, all rose as they tracked an overnight record rally in US stocks, which rode on optimism that the global economy can overcome new threats from the Omicron variant of Covid-19.