Hong Kong stocks hit two-week high as Tencent recovers from panic selling and investors switch to policy-friendly sectors

·3 min read

Hong Kong stocks advanced to the highest level in almost two weeks as Tencent Holdings rebounded from a panic sell-off and traders switched to policy-friendly sectors by loading up stocks of new energy to sportswear companies.

The Hang Seng Index gained 0.9 per cent to 26,426.56 at the close of Wednesday trading. Tencent, China’s biggest online gaming platform operator, rebounded more than 2 per cent after a mainland newspaper retracted a report that denounced the industry. China’s Shanghai Composite Index added 0.9 per cent.

Anta Sports Products rallied on a Chinese government’s plan to boost the size of the sports industry to 5 trillion yuan (US$773.9 billion) by 2025 while electric-car maker BYD jumped to a record close. Both sectors are seen as a shelter from the current regulatory storm.

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Chinese newspaper deletes report that called video gaming ‘spiritual opium’

Tencent recouped some of the 6.1 per cent slump on Tuesday after the media outlet owned by the state-run Xinhua News Agency retracted an article that labelled online gaming as “opium and drugs.” It republished the article after scrubbing those references.

“Given all that we had was an article that got later retracted, we see limited chance of a follow-up in government actions to regulate the industry further,” analysts at Morningstar wrote in a note to clients.

Tencent climbed 2.4 per cent from a one-week low to HK$456.80, after sliding 6.1 per cent on Tuesday. Meituan added 0.9 per cent to HK$213.60.

Anta Sports surged 4.7 per cent to HK$181.90 and garment maker Shenzhou International climbed 5.8 per cent to HK$184.90. BYD jumped 8.3 per cent to HK$280.60 and Geely Automobile added 5 per cent to HK$28.20.

Mainland traders bought HK$2.44 billion (US$313.6 million) worth of Hong Kong-listed stocks on Wednesday, snapping a 12-day selling spree, according to Stock Connect data compiled by Bloomberg. Foreign investors scooped up Chinese onshore stocks for six days in a row.

Traders are also monitoring if Beijing will further loosen its monetary or fiscal policies as the nation’s economic recovery loses momentum, following a cut in banks’ reserve ratio last month. New infections in several provinces have also threatened to upend the consumption engine.

Chinese authorities have already started a dovish policy shift to avert a moderation in growth, according to strategists at BlackRock.

Macau casino operator Galaxy Entertainment led losers. The stock slid 6.5 per cent to HK$46.75 after the city reimposed stricter rules by requiring people departing the casino hub to undergo Covid-19 tests.

Meanwhile, Alibaba Group Holding, the owner of this newspaper, lost 0.6 per cent to HK$192.30. First-quarter revenue at the e-commerce group rose 34 per cent from a year earlier, trailing market consensus, while net income dropped 8 per cent.

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