Hong Kong stocks rise, end on the cusp of bull market after longest winning streak since October on earnings optimism

Insurer AIA Group said new business value, an underlying gauge of future profitability, rose 27 per cent in the first quarter and boosted its buy-back plan by US$2 billion
Chengdu became the latest city seeking to resurrect its property market, removing homebuyers’ qualification for purchases and supporting developers’ funding needs

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 11:01am, 29 Apr 2024

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Hong Kong stocks finished higher nearing bull market territory, defined as a 20 per cent gain from a recent low, as investors were energised by corporate earnings announcements and the official moves to resurrect China’s embattled property sector.

The Hang Seng Index rose 0.5 per cent to 17,746.91 at the close, after rising as much as 2.2 per cent that took its gain to 20 per cent from a January 22 low. The gauge also posted a sixth straight day of gains, the longest winning streak since October.

The Hang Seng Tech Index slipped 0.1 per cent. The Shanghai Composite Index climbed 0.8 per cent, as mainland investors dumped havens, pushing 10-year Chinese government bond yields to the highest in two months.

Insurer AIA Group rallied 6.1 per cent to HK$57.30 after saying that new business value, an underlying gauge of future profitability, increased 27 per cent in the first quarter and boosted its buy-back plan by US$2 billion. China Life Insurance added 2.3 per cent to HK$10.54 after its first-quarter result exceeded the consensus estimate.

AIA Group building in Hong Kong, one of biggest life insurance company in the world. Photo: Shutterstock Images

“Value of new business grew at a double-digit rate across all reportable segments and margin expansion was driven by favourable shifts in product mix,” said Jefferies analysts in a post-earnings report. “AIA has surprised us by adding another US$2 billion to the existing US$10 billion buy-back. This uplift is even more material when set against the [around] US$3.3 billion (of the US$10 billion) which was due to be returned in 2024.”

In the latest sign of officials seeking to resurrect the property market, the southwest city of Chengdu will no longer review homebuyers’ qualification for real estate purchases starting Monday and authorities pledged to meet developers’ reasonable funding demands.

China Resources Land posts profit increase, sees stability ahead for sector

The Hang Seng Index has risen more than 7 per cent this month, making it the best performer among the key equity gauges globally in the span. Stretched valuations of the US and Indian stocks have prompted global fund managers to recalibrate their portfolios in favour of relatively cheap Hong Kong stocks, while mainland investors have also ramped up buying.

UBS Group last week raised the ratings on both Chinese and Hong Kong stocks to overweight on earnings resilience and HSBC Holdings said that overseas investors had increased exposure to Chinese equities significantly.

“Hong Kong’s market has now become a haven for global investors, with the bigger swings in the currency markets,” said Fang Yi, an analyst at Guotai Junan Securities in Shanghai. “The allocation value of Hong Kong stocks has now increased, particularly from those internet companies that have lower valuations, lighter assets and faster earnings growth.”

Chinese property stocks stood out among the gainers, with Longfor Group surging 7.1 per cent to HK$11.78 and China Overseas Land and Investment rising 4 per cent to HK$14.52. Among the developers that are not on the Hang Seng Index, Sunac China Holdings jumped 28 per cent to HK$1.45, China Vanke surged 19 per cent to HK$4.95 and Shimao Group Holdings soared 61 per cent to HK$0.57.

Rumours were swirling Beijing would roll out specific measures to bail out the property industry in Community Party’s third plenum in July, which Nomura said was not likely.

“We do expect Beijing to eventually become more supportive of the worsening property sector by paying directly for the rescue,” said Nomura Holdings in a report on Monday.

Other major Asian markets traded higher across the board. South Korea’s Kospi rose 1.2 per cent and Australia’s S&P/ASX 200 added 0.8 per cent, while Taiwan’s Taiex index advanced 1.9 per cent. Japan’s market is closed for a holiday.

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