Hong Kong stocks rose for a fifth day, delivering the best week in six months as investors bet on stronger stimulus injection after China signalled its concerns about the nation’s faltering economy. Alibaba Group and Meituan powered gains.
The Hang Seng Index gained 0.3 per cent to 19,403.94 at 3.20pm local time, bringing the rally this week to 5.6 per cent, the most since a 6.1 per cent surge in the opening days of January. The Tech Index declined 0.5 per cent, paring an almost 9 per cent weekly gain. The Shanghai Composite Index gained less than 0.1 per cent.
NetEase surged 2 per cent to HK$166.90, Tencent gained 0.6 per cent to HK$352, while chip maker SMIC jumped 2 per cent to HK$20.25. Sportswear maker Li Ning added 2.4 per cent to HK$42.45and peer Anta Sports jumped 3 per cent to HK$84.90. While JD.com, Meituan erased gains, the duo and Anta have logged more than 10 per cent gain this week.
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The rally this week has restored more than US$180 billion of capitalisation to the city’s stock market. Still, the Hang Seng Index remains about 3.7 per cent lower than the start of the year, trailing most stock gauges in the region. Stocks pared gains in Friday trading, after rallying as much as 1 per cent. HSBC on Friday lowered its year-end targets for the Hang Seng Index by 13 per cent to 19,580 on weak economic recovery.
China’s top officials including President Xi Jinping and Premier Li Qiang to regulatory agencies have turned more friendly to private businesses, praising their economic contribution soon after handing down billion-dollar fines last week, seen as the culmination of years-long crackdown on tech firms.
There are “positive signs of increasing ‘goodwill gestures’ from the government to the private sector,” Patrick Pan, China equity strategist at Daiwa, wrote in a note to clients. It will be a good start for policymakers to understand the situation on the ground, and avoid “wild policy swings” over the long run, he added.
Investors shrugged off more data showing China’s post-pandemic economic recovery is waning. Exports and imports shrank more than expected in June, while growth in the services sector cooled, reports this month showed.
The Politburo meeting later this month will set the course for economic policy for the second half, according to BCA Research. China will only resort to “irrigation-style” stimulus if something breaks in the economy or financial markets,” it said in a report on July 12.
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“The gradual and targeted rounds of stimulus are unlikely to boost economic activity considerably,” the Canadian research firm said. “The reasons are the diminished efficacy of the monetary transmission mechanism and the unique features and constraints of the nation’s fiscal system.”
Elsewhere, CK Asset Holdings jumped 2 per cent to HK$44.45. Billionaire Li Ka-shing’s flagship forfeited a HK$2.08 billion deposit paid by the buyer, LC Vision Capital 1, after the Singapore-based wealth manager failed to complete the purchase of 21 Borrett Road property in the city’s Mid-Levels area.
One stock debuted on Friday. Qingdao Paguld Intelligent Manufacturing surged 33 per cent to 50.48 yuan in Shenzhen.
Major Asian markets advanced. The Kospi Index in Korea gained 1.4 per cent and the S&P/ASX 200 Index in Australia added 0.8 per cent, while the Nikkei 225 Index in Japan lost 0.1 per cent.
More from South China Morning Post:
- Traders flock back to China tech stocks after Premier Li Qiang, top planning body acknowledge sector’s economic role
- Hong Kong stocks eye best week since January on tech rally as China praises market leaders after fines, crackdown
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