Hong Kong Stocks Rise as Bargain Hunters Descend After Rout
Hong Kong Stocks Rise as Bargain Hunters Descend After Rout
(Bloomberg) -- Stocks in Hong Kong and China rose, contrasting with losses elsewhere in Asia following a global sell-off.
The Hang Seng Index closed up 0.8% after falling as much as 1.6%, lifted by property-related stocks. A gauge of Chinese stocks in Hong Kong climbed 0.4%. Both have lost around 16% from their April highs, weighed down by the U.S.-China trade dispute and protests in Hong Kong. The Shanghai Composite Index added 0.3% and the yuan weakened slightly onshore. The small-cap ChiNext index rose 1.2%.
"The market was seriously distressed after earlier selloffs, so we’re seeing a dead cat bounce right now along with some possible short covering," said Alex Wong, Director of Asset Management at Ample Capital Ltd. The Hang Seng Properties Index gained 3.3%, its biggest increase since January, after weeks of anti-government protests in Hong Kong dragged the gauge to its lowest this year. New World Development Co. saw its biggest gain since 2009.
Stocks dropped elsewhere in Asia after the U.S. government bond market sounded alarms over the health of the economy. The 10-year Treasury yield slipped below the rate on two-year bonds for the first time since 2007, in what is considered to be a signal of a U.S. economic recession beginning in next 18 months. Such expectations have been bolstered by signs that global growth is slowing, prompting investors to flee riskier assets.
“The market is already is quite weak and this additional risk from the inverted curve would put more pressure on,” said Daniel So, strategist at CMB International Securities Ltd.
Tencent Holdings Ltd. was a drag on Hong Kong stocks, falling as much as 4.2% after its quarterly revenue missed expectations. The results triggered several price cuts by analysts, who expect the social media giant’s online advertising business to remain sluggish due to intensifying competition.
“Fear of a U.S. recession added to market worries as poor second-quarter economic data in Asia already concerned investors,” said Banny Lam, head of research at CEB International Investment Corp. “Tencent’s earnings miss is also affecting the market.”
Mainland investors continued to pile into Hong Kong stocks via exchange links with Shanghai and Shenzhen as some investors see dip buying opportunities. They pumped money across the border to buy stocks for a 20th day on Thursday, spending $589 million according to data compiled by Bloomberg, extending the longest streak of inflows since February last year.
Wharf Real Estate Investment Co., Link Reit and Sun Hung Kai Properties Ltd. added at least 4%, among the best performers on the Hang Seng Index. MTR Corp., which develops real estate in Hong Kong and operates the city’s railway network, advanced 4.4%.
The Hong Kong dollar jumped as much as 0.17%, as 12-month forward points surged in a sign of tighter liquidity in the market. It pared the advance to 0.1%.
To contact Bloomberg News staff for this story: Amanda Wang in Shanghai at twang234@bloomberg.net;Kari Lindberg in Hong Kong at klindberg13@bloomberg.net
To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, David Watkins, Will Davies
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With assistance from Bloomberg