Hong Kong stocks rose for a third day amid investors’ expectations of a lower interest rate environment following weaker-than-anticipated US economic data overnight. Sentiment was also lifted by a private sector survey which showed China’s services activity in May accelerated.
The Hang Seng Index rose 0.33 per cent to 18,505.56 at the noon break on Wednesday, bringing the week’s gains to 2.3 per cent. Last week, the benchmark retreated 2.8 per cent. The Tech Index added 0.8 per cent, while the Shanghai Composite Index eased 0.4 per cent.
“The market has corrected nicely and we are now seeing a return to the bullishness that started in March,” said Nitin Dialdas, chief investment officer at Mandarin Capital Ventures in Hong Kong.
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Investors feel more comfortable on the interest-rate front, as they feel rates could fall as there is less uncertainty now, he added.
A food delivery courier for Meituan. The company releases its quarterly earnings this evening. Photo: Bloomberg alt=A food delivery courier for Meituan. The company releases its quarterly earnings this evening. Photo: Bloomberg>
US markets rose overnight after data showed job openings fell more than estimated in April to the lowest point in over three years, reviving speculation of an early cut to interest rates.
Food-delivery platform Meituan rose as much as 2.2 per cent ahead of its first-quarter earnings report this evening, before surrendering gains and dipping 0.3 per cent to HK$113.20 at the break.
“In the first half of 2024, Meituan would prioritise efficiency improvement over market share and growth, via lifting unit prices, reducing subsidies, and shutting down underperforming warehouses/pick-up stations,” said HSBC analysts in a note published in April.
“It has already shown strong loss-reduction progress on a [year-on-year] basis in the first quarter,” said the bank which has a buy rating on the stock with a price target of HK$165, implying an upside of 43 per cent from the current levels. The company has a calendar year.
Adding to market optimism was China’s services activity data for May, which showed acceleration at the quickest pace in 10 months and that staffing levels expanded for the first time since January, pointing to sustained recovery in the second quarter.
“Market sentiment remained optimistic,” said Wang Zhe, senior economist at Caixin Insight Group. “Surveyed companies were generally confident about future market prospects, although they expressed concerns over the global economic landscape and growing costs of raw materials. The corresponding gauge remained in expansion but below its historical average.”
Trip.com Group’s shares fell 0.9 per cent to HK$404.60 after it announced a US$1.3 billion convertible bond issue to fund repayment of existing debt, expand its overseas business and for working capital needs. The note has a 0.75 per cent coupon and converts to equity at a 32.5 per cent premium.
Other key Asian markets were broadly higher. Australia’s S&P/ASX 200 rose 0.4 per cent, South Korea’s Kospi advanced 1.2 per cent, but Japan’s Nikkei 225 lost 1.1 per cent.
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