The Hong Kong stock market rallied on Tuesday amid positive results of a US coronavirus vaccine first-phase trial and relaxation of global lockdowns, as feel-good factors bolstered investor sentiment.
The gain in the Hong Kong stock market followed the overnight rally on Wall Street amid encouraging progress of a vaccine against the novel coronavirus developed by US drugmaker Moderna, said Daniel So Pui-fung, an analyst at China Merchants Bank International in Hong Kong.
The gain in the Hong Kong stock market followed the overnight rally on Wall Street amid encouraging progress of a vaccine against the novel coronavirus developed by US drugmaker Moderna
Daniel So Pui-fung, an analyst at China Merchants Bank International in Hong Kong
He added that the market was also boosted by the revamp of Hong Kong’s stock index compiler Hang Seng Indexes Co Ltd to include in the Hang Seng Index and the Hang Seng China Enterprises Index those companies with weighted voting rights, and secondary-listed companies from the Chinese mainland, Hong Kong, Macao and Taiwan.
“The revamp may as well boost market turnover and attract more investor interest in the long term,” So said.
The city’s benchmark Hang Seng Index gained over 600 points in the morning session. At the end of the day, HSI had increased 453.36 points, or 1.89 percent, to close at 24,377.13 points. The market turnover recorded a 15 percent increase compared with Monday, amounting to HK$125.9 billion (US$16.24 billion) on the main board.
The Hang Seng China Enterprises (H-share) Index increased 156.94 points, or 1.61 percent, to close at 9,883.37.
Investors were cheered by several optimistic news items since the start of this week.
President Xi Jinping said on Monday that China will make its COVID-19 vaccine a global public good when it is developed and available. Meanwhile, China has pledged US$2 billion over two years to help with the COVID-19 response and with economic and social development in affected countries, especially developing countries.
US Federal Reserve Chairman Jerome Powell reiterated on Monday that there won’t be another Great Depression, and the Fed is committed to using its full range of tools to support the economy during this challenging time.
Shares of tech companies posted gains on the Hong Kong bourse after secondary-listed companies and those with weighted voting rights were included as constituent stocks. Chinese mainland tech giant Alibaba saw its shares gain 3.35 percent to HK$209.80 per share. Tencent gained 1.65 percent, and shares of Meituan Dianping were up 3.2 percent to HK$125.80.
“The revamp will help the index family raise representation of new-economy stocks with higher earnings-per-share growth potential; enjoy a valuation premium, with stronger liquidity flow; drive turnover higher; and increase diversity,” Bruce Pang, head of macro and strategy research at China Renaissance Securities Ltd, said in a research note on Tuesday.
He added that the reform may also facilitate more new economy companies to seek IPO or secondary listings in Hong Kong.
The reform paved the way for mainland tech companies such as Alibaba, Meituan Dianping and Xiaomi to join the blue chip constituents in the HSI and HSCEI in August.
“We think the HSIC intends to broaden HSI’s and HSCEI representation and encompass investors’ growing interest in Chinese equities by providing a more-balanced sector mix and covering more share classes,” Pang said.
Shares of Hong Kong Exchanges and Clearing Ltd jumped 4.08 percent to HK$265.2 per share today.
Benefiting from the rising momentum of oil price on Monday, the country’s three leading oil companies saw their share prices increase. Shares of PetroChina, China National Offshore Oil Corp, and China Petroleum & Chemical Corp gained 2.96 percent, 2.64 percent and 2.73 percent respectively.
In the long run, So expects limited upside potential of the Hong Kong stock market as uncertainties related to the coronavirus pandemic still casts a shadow. Besides, strained tensions between the world’s two biggest economies, the US and China, still weigh on investors’ sentiment.
