Tech Stocks Fuel Hong Kong Reprieve Rally as China Money Returns
(Bloomberg) -- The return of Chinese investors and bargain hunters in tech stocks is giving Hong Kong’s equities market a reprieve from weeks of relentless selling.
The Hang Seng Index advanced 0.9% Wednesday, led by a rebound in technology giants including Tencent Holdings Ltd., after Chinese state media moderated its criticism of the sector. BYD Co. Ltd. jumped 8.3% on expectations of improving business outlook while sportswear firms saw an early surge after Beijing unveiled a massive sports investment plan.
“Today we see some technology rally, because some short-term traders might find some opportunities and are betting on technical rebound,” said Steven Leung, UOB Kay Hian executive director. “We are seeing many mainland investors buying Tencent today -- a good sign for the market since they were net sellers.”
Panic selling drove the Hong Kong benchmark down by 5% last week after a shock ban by China on profit making at tutoring companies, and stricter rules for tech firms. Traders are now debating whether the worst of the selling is over, though some analysts warned that the new regulatory environment will continue to push stocks lower.
In a sign that some investors think the bottom may have been reached, Tencent jumped 2.4%, erasing some of the 6.1% drop on Tuesday after state media curbed its harsh descriptions of online gaming and indicated that all of society needed to play role in preventing addiction. The Hang Seng Tech Index rose 2.4%.
Chinese investors net bought a combined HK$2.5 billion ($322 million) worth of Hong Kong stocks via the trading links with Shenzhen and Shanghai on Wednesday, Bloomberg data showed. That’s the first day of net inflows since July 16 and biggest amount since July 9.
Meanwhile, a Bloomberg gauge tracking Macau’s casino operators fell 5.2% to the lowest since April 2020 after Macau required Covid-19 testing for people departing the city after new cases were identified.
Wynn Macau Ltd. dropped 7.8%, while SJM Holdings Ltd. lost 6.4% and Galaxy Entertainment Group Ltd. fell 6.5%.
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