Tencent leads as HSI flies into second half

Business | Kevin Xu 3 Jul 2020

Hong Kong's stock market kicked off the second half of the year with an upbeat note on the first trading day after the national security law came into effect, with the benchmark Hang Seng Index shooting up by nearly 700 points to its highest since mid-March, but analysts suggested that investors remain cautious as uncertainties abound.

The Hang Seng Index shot up by 697 points or 2.85 percent at 25,124. Turnover was HK$175.99 billion, the highest in over a month. But the Hang Seng Index night futures fell 91 points to 25,046 as of 7.04pm.

The upsurge in Hong Kong stocks was mainly led by the good performance in the A-share market, said Linus Yip Sheung-chi, chief strategist at First Shanghai Securities.

"The US may introduce more sanctions or policies, but in fact, the market has already digested this expectation and the negative pressure on the stock market," said Dickie Wong, executive director of research at Kingston Securities.

In mainland China, the Shanghai Composite Index advanced 64.59 points, or 2.13 percent, to 3,090.

Meanwhile, the net inflow of southbound capital to Hong Kong through the Stock Connect trading link was at HK$5.08 billion.

"I still think the Hong Kong stock market in the short run may continue to go up but may find some kind of resistance at 26,000 points, which is a very key resistance level," Wong said.

Wong suggested that retail investors take a cautious stance, as the money flowing into Hong Kong's stock market will push up valuations for new economy stocks such as Alibaba (9988), in hopes more US-listed Chinese company will return to Hong Kong.

"There are still some trading opportunities right now because the market is still hot. But if we take a longer time horizon, like in the second half of this year, maybe it's not a good time to have some position trading," said Yip. "We are still facing concerns like the coronavirus, and the economy is still not so good. Another major concern is the US president election in November," he added.

China Life Insurance (2628) increased 9.74 percent to HK$17.12 yesterday, the best performer among blue chips.

Tencent (0700) climbed by 3.99 percent at HK$518.5, hitting a new high. Hong Kong Exchanges and Clearing (0388) rose 6.06 percent to HK$350. Hong Kong Television Network (1137) surged 16.18 percent to HK$5.17.

Hang Seng Indexes Company will release the results of the second quarter review of the Hang Seng Family of Indexes on August 14. The constituent changes will be made to the Hang Seng Family of Indexes with effect from September 7.

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