Alibaba, Longfor surge as Hong Kong stocks arrest 5-day slump on China bets while New World jumps on debt, dividend plan
- Stock valuations have returned to neutral levels after correction, Guosen Securities says; China contributed the most to recent Asian earnings upgrades, BofA says
- New World Development surged after a plan that would allow the developer to raise HK$21.8 billion from a takeover offer for its unit NWS Holdings
The Hang Seng Index jumped 1.9 per cent to 19,148.13 at the closing of Tuesday trading, the most since June 15, to rebound from a three-week low. The Tech index climbed 2.6 per cent, while the Shanghai Composite Index added 1.2 per cent.
Tencent rallied 2.6 per cent to HK$341.60 and Alibaba Group strengthened 2.8 per cent to HK$85.55 while NetEase rose 5.2 per cent to HK$153.20. Developer Longfor Group surged 7.9 per cent to HK$19.30 and peer Country Garden jumped 6.5 per cent to HK$1.65.
Local stocks had slumped 6.2 per cent over the past five days, erasing HK$1.45 trillion (US$185 billion) of market value from the 80 Hang Seng Index members. Valuations are now less demanding, some analysts said, while China contributed most positively to earnings upgrades in the region this quarter, Bank of America said.
“More coordinated easing measures are on the way,” the US bank’s economists including Helen Qiao said in a separate note. More balanced policy mix is likely to boost consumption, support investment and prevent further deterioration in property sector, they added.
After experiencing a rapid correction, valuations in Hong Kong stocks, measured by risk premium, have returned to a relatively neutral position in the short term, Guosen Securities said in a note on Monday.
