Timely boost for shares in retail, food and travel

Hong Kong stocks are expected to rise by 200 to 300 points today after Beijing announced it was dropping quarantine requirements for inbound travelers from early January.

Equities related to easy border crossings such as retail, food and beverage plus travel-linked businesses stand to benefit the most, analysts said.

But having risen since Beijing began easing Covid restrictions earlier this month the stocks may have limited potential for further increases.

People arriving in the mainland will only be required to obtain negative Covid test results within 48 hours of departure, according to the National Health Commission.

The market has digested and priced in the news, said Andrew Wong Wai-hong, the chairman and chief executive of Anli Securities.

Additionally, he said, stocks including Macau gaming operators may be overpriced compared to a stock like Tencent, which has not yet rebounded to half of its all-time peak.

And investors are still concerned about the short-term impact of Beijing's speedy dropping of its zero-Covid policy, Wong said, while details of the reopening plan are not yet clear.

It will take some time before Hong Kong sees a substantial rise in mainland visitors even if the travel curbs are removed, said Kenny Tang Sing-hing, chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators.

As it was, the A share and European markets performed well yesterday.

The Shanghai Stock Exchange Composite Index climbed nearly 1 percent following a 0.65 percent rise on Monday while the Shenzhen Stock Exchange Composite Index rose by 0.88 percent. The STOXX Europe 600 Index edged up by 0.4 percent last night.

Commodities prices also advanced. Oil hit a three-week high last night after Beijing dismantled its virus rules.

Brent crude was up 1.1 percent at US$84.97 (HK$662.76) a barrel, and US West Texas Intermediate crude gained 0.9 percent to US$80.27.

Beijing's move was "something traders and investors have been hoping for," Avatrade analyst Naeem Aslam said.

Gold also rose, with spot gold advancing 0.6 percent to US$1,808 an ounce last night.

The precious metal has gained more than 8 percent this quarter, helped by the greenback's retreat and hopes the Fed will slow aggressive monetary tightening.

aiden.he@singtaonewscorp.com