Hong Kong’s Hang Seng Index rises after two straight weeks of gains, as traders set aside coronavirus jitters
- Hong Kong kicks off second week of newborn bull market
- Chinese media outlet warns investors against getting too giddy about hot stock markets – but tech-heavy Shenzhen Composite Index soars 3.5 per cent
Hong Kong stocks advanced, with car makers surging, while mainland shares soared as “fear of missing out” and expectations of China’s recovery drove sentiment despite growing concerns the mainland markets are overheated.
High turnover stocks were Tencent, China’s social media and online gaming giant, which finished down 1 per cent to HK$541, and Alibaba, the country’s e-commerce titan and the owner of the South China Morning Post, which slipped 0.4 per cent to HK$254.40.
Daiwa Capital Markets reiterated its buy “rating” on Alibaba and boosted the 12-month target price to HK$294 from HK$260, or a 15.1 per cent jump from Friday’s close. Analyst John Choi said he expects Alibaba will post a “solid” quarter, with its revenue growing 30 per cent year-on-year when it reports next month.
Geely Automobile shot up 8.3 per cent, while BYD jumped 16.2 per cent. Great Wall Motor soared 5.5 per cent to HK$6.70, as Jefferies reiterated the stock as a “buy” on strong sales in June – 30 per cent year-on-year growth – and boosted the target price to HK$9.20 from $HK6.70.
On the mainland, the Shanghai Composite Index, like the Hang Seng, struggled initially for direction, but finished with a 1.8 per cent gain at 3,443.29. Kweichow Moutai, one of the most popular stocks traded on the Hong Kong-mainland Stock Connect, advanced 4 per cent to 1,782 yuan.
The tech-heavy Shenzhen Composite Index rallied 3.5 per cent, despite steps by authorities to cool the stampede of investors into mainland stocks.
A commentary published by state-owned Securities Times cautioned investors against chasing the rally as market sentiment has turned bullish.
It urged individual investors to focus on companies’ fundamentals, adding that only those firms with solid earnings were good buys.
“It is important for the official media organisations to play down investors’ expectations for a strong rally at this moment,” said Zhou Ling, a fund manager with Shanghai Shiva Investment.
Mainland stocks regained their upward momentum after losing 2 per cent last Friday when the country’s state funds announced plans to divest some stakes.
“Market sentiment remains strong as ample cash flowing to A-share stocks cemented investors’ belief that the rally would not end soon,” said Ivan Li, a money manager at Shanghai-based Loyal Wealth Management. “Risks are increasing since fundamentals may not be able to support the lofty prices.”
The Shanghai Composite Index shed 2 per cent on Friday, snapping an eight-day winning streak.
High turnover in China was seen as a sign Monday that the surge will continue due to strong buying interest.
Trading values topped 1.54 trillion yuan on Monday, the sixth day they exceeded 1.5 trillion yuan.
Food and drink stocks were among the top gainers.
About 10 companies in the sector including Haoxiangni Health Food and Shenzhen Cereals Holdings, both of which are traded in Shenzhen, hit the 10 per cent daily upper limit.
In the Asia-Pacific region, Tokyo’s Nikkei 225 advanced 2.2 per cent, Korea’s Kospi climbed 1.7 per cent, while Australia’s S&P/ASX 200 rose 1 per cent.
US stock futures rose.
Investors in Hong Kong were kicking off the second week of the newborn bull market. The bullish sentiment in part reflects the large amount of mainland money pouring in – for the 19th straight session on Monday there was a net inflow from the mainland on the Stock Connect – and the rush of initial public offerings. The Hang Seng Index clinched back-to-back weekly gains on Friday and is on track for a monthly gain.
Meanwhile, China will release its latest data on second-quarter GDP, retail sales, unemployment and industrial production on Thursday.
The GDP data is “likely to show a recovery to growth from [the first quarter’s] virus-driven contraction,” Bloomberg Intelligence economists said in a new note. “Exports may post a milder decline.”
Also, two stocks debuted in the city.
Yik Wo International Holdings, which makes disposable plastic containers, jumped 90 per cent on the GEM board.
Honliv Heathcare Management Group, which operates one of the largest for-profit hospitals in China, gained 15.2 per cent in its debut on the main board.
On the mainland, two companies debuted.
Sihui Fuji Electronic Technology, which makes printed circuit board products, surged to the 44 per cent first-day upper limit. Bearings manufacturer Luoyang Xinqianglian Slewing Bearing also rose 44 per cent higher than its IPO price.
