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A screen marking the listing of Baidu on the Hong Kong stock exchange outside the Exchange Square complex in Hong Kong on Tuesday, March 23, 2021. Photo: Bloomberg.
BusinessMarkets

Hong Kong’s index rises for the third day on hope that reopening of China border would bolster local economy

  • The Hang Seng Index advanced by as much as 1.4 per cent to 28,593.81
  • As many as 53 stocks in the benchmark advanced, led by large Chinese companies such as AAC Technologies Holdings and China Petroleum & Chemical Corporation, with declines led by Haidilao and Anta Sports
Hang Seng Index
Iris Ouyang
Iris Ouyangin Shenzhen
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Hong Kong’s benchmark stock index advanced for the third day, amid optimism that two consecutive weeks of zero new local infections of the Covid-19 disease puts the city on track to seek to reopen its northern border with Shenzhen, which would bolster the local economy’s recovery.

The Hang Seng Index advanced 1.4 per cent to 28,593.81 on Tuesday, after rising by as much as 1.5 per cent in earlier trading. As many as 53 stocks in the benchmark advanced, led by large Chinese companies such as AAC Technologies Holdings and China Petroleum & Chemical Corporation, while Haidilao and Anta Sports Products fell. The China Enterprises Index, which tracks the performance of Chinese companies on the local bourse, rose by 1.4 per cent to 10,654.30.

Stock indexes on mainland China exchanges were mixed, with the Shanghai Composite Index rising by 0.3 per cent to 3,529,01, the key gauge on the technology-heavy Shenzhen exchange was almost flat, while ChiNext shed 0.7 per cent.
Hong Kong’s economy expanded 7.9 per cent in the first quarter, at a faster rate than expected. Some traders are hoping for zero local Covid-19 infections for two weeks, which will enable the city to reconnect to the mainland without quarantine requirements, as the city’s chief executive Carrie Lam said Hong Kong is within reach of the goal. An opening of the city’s borders with Shenzhen would allow more people to visit the city, extending a lifeline to a local economy that is heavily dependent on tourists and business travellers for income.

“Stocks in Hong Kong and mainland China are actually one [calendar] quarter ahead of the US market, so they are gradually rebounding even though stocks on Wall Street declined,” said Willer Chen, analyst at Forsyth Barr Asia in Hong Kong. “The outlook for the HSI will be driven by tech stocks’ results the rest of this month; their rebound could be paused if their results are unfavourable.”

Baidu and NetEase are scheduled to release their first-quarter financial results today, while JD.com is expected to report on Wednesday, Tencent on Thursday, and Meituan at the end of this month.
Baidu jumped 2 per cent to HK$186.70, NetEase was up by 0.7 per cent to HK$165, while JD.com advanced 1.9 per cent to HK$270.80. Tencent’s stock price increased by 1.4 per cent to HK$609, while Meituan the food deliverer rose by 2 per cent to HK$259.40.
A large screen showing the latest stock market data in Shanghai on 10 May 2021. Photo: EPA-EFE
Shenzhou International and AAC Technologies were among the biggest gainers, both up more than 5 per cent. Oil stocks rallied near a two-year high on optimism that economic recovery in the US would be supported by the US Federal Reserve’s loose monetary policy. PetroChina rose 4.8 per cent. China Petroleum, also known as Sinopec, added 4.7 per cent to HK$4.25. 
Three stocks made their trading debuts today in Shanghai and Shenzhen. Kontour Xi’an Medical Technology, which makes and distributes surgical supplies such as sternum and rib fixation systems, soared fivefold to 92.05 yuan when they began trading in Shanghai, compared with their initial public offering (IPO) price of 17.34 yuan.

Tianjin Yiyi Hygiene Products, which produces personal hygiene products such as babies diapers and sanitary napkins, jumped 44 per cent in its trading debut on the Shenzhen exchange to 64.22 yuan, compared with its IPO price of 44.60 yuan.

Namchow Food Group, which runs a network of bakeries in China’s major cities, jumped 44 per cent in its Shanghai trading debut to 24.45 yuan, from its 16.98 IPO price.

Britain reopened its economy after a four-month Covid-19 lockdown, while France and Spain also relaxed Covid-related restrictions after accelerating vaccination, Reuters reported. Portugal and the Netherlands eased travel restrictions during the weekend.

The reopening of more developed nations offset the concerns on resurgence of Covid-19 infections in Asia. Taiwan reported 333 new cases and announced a month-long ban on non-residents and transit visitors entering Taiwan with exceptions for humanitarian cases.

China Mobile gained 2.7 per cent after the company said the board approved its proposal to issue of 964.8 million shares in Shanghai. The world’s largest cellular phone network operator, together with its peers China Telecom and China Unicom, have bear the brunt of the Trump administration’s policy to bar US investments into Chinese companies which were deemed threatening national security. China Mobile’s shares were delisted from the New York Stock Exchange.
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