Hang Seng Index advances as Anta Sports rallies while market awaits Fed decision on interest rates

·4 min read

Hong Kong stocks rose as Anta Sports rallied on southbound fund buying. Losses in Hong Kong Exchanges & Clearing (HKEX) and Meituan limited gains as investors waited for the Federal Reserve policy statement.

The Hang Seng Index advanced 0.5 per cent to 29,071.34 at the close of Wednesday trading, halting a two-day decline. The Shanghai Composite Index rose 0.4 per cent to 3,441.10, after swinging between gains and losses for more than 10 times during the session.

Anta led the market higher with a 4 per cent surge to HK$141.70, the biggest jump in a month on signs funds were buying after a sell-off last week. Mainland investors spent HK$277 million picking up the stock on Monday and Tuesday, according to stock exchange data.

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Elsewhere, trading was lacking direction as the Fed concludes its two-day FOMC meeting on Thursday. Hong Kong’s monetary authority runs its rate policy in lockstep with the Fed to preserve the city’s currency peg with the US dollar. Any change in US rates policy would be matched in Hong Kong, which would affect the local stock market.

“The market doesn’t have a [clear] direction,” said Willer Chen, analyst at Forsyth Barr Asia in Hong Kong. “In the short term, people are looking at the Federal Open Market Committee meeting, while individual stocks are driven by earnings.”

HKEX lost 0.3 per cent to HK$488.60 despite posting a 70 per cent surge in net profit of HK$3.84 billion (US$494.7 million) last quarter. The operator of the world’s third-largest capital market benefited from a boom in trading volume and a hectic flow of stock offerings. Despite its best-ever quarter, it fell short of market expectations for an 82 per cent gain.

Anta Sports jumped 4 per cent to HK$141.70 as southbound capital flocked to buying it in the past two trading days. Mainland investors spent HK$216.1 million on Monday and HK$60 million in purchasing the stock.

Meituan, the fifth-largest index member, declined 1.2 per cent to HK$309.40 as investors braced for the outcome of a state probe into anti-competition practices on its food-delivery platform. The stock erased losses to close 2.6 per cent higher on Tuesday.

The probe shows China’s regulatory crackdown is extending beyond Alibaba Group Holding (the owner of this newspaper), and that technology, media and telco stocks that powered the rally from March 2020 to February 2021 “now face major headwinds,” according to BCA Research.

Xiaomi slumped 3.8 per cent to HK$25.30 amid worsening the Covid-19 pandemic in India, where it has the biggest market share. Xiaomi’s phone business topped the market with 26 per cent shipment in 2020 according to Counterpoint Research.

Markets in Asia-Pacific region were mixed. Stock benchmarks in Australia and Japan added by 0.4 per cent and 0.2 per cent respectively, while the Kospi in South Korea slid 1.1 per cent.

On the mainland, alcohol stocks rallied. Shanxi Fen Wine and Jiangsu King’s Luck Brewery rose 5.6 per cent. However, the world’s most valuable liquor stock Kweichow Moutai lost 2.5 per cent to 2,042 yuan after its first quarter results missed market expectation. Profit grew 6.6 per cent to 14 billion yuan (US$2.16 billion) from a year ago, the lowest in at least six years.

Three new stock listings spiced up the action on mainland bourses, as local stocks traded in a narrow range of 125-points over the past two months.

Shenzhen Rayitek Hi-tech Film, which produces polyamide films for use in electronic products, more than quadrupled when its shares began trading in Shanghai at 27.12 yuan. Shenzhen Xinyichang Technology, a maker of semiconductor devices, tripled to 65.50 yuan in Shanghai. Dongrui Food Group, a meat processor and abattoir operator in the Guangdong province, advanced 44 per cent to 91.27 yuan in Shenzhen.

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