Hong Kong stocks approach 3-week high as Nongfu, SMIC surge amid bullish China data

Hong Kong stocks approach 3-week high as Nongfu, SMIC surge amid bullish China data

Latest reports showed China’s services sector and manufacturing activity expanded in October after Beijing’s stimulus blitz

Hong Kong stocks approached a three-week high after reports showed China’s services sector expanded at the fastest pace since July, following a recovery in manufacturing activity. Policymakers also signalled Beijing is opening the local market to more foreign investors.

The Hang Seng Index advanced 2.1 per cent to 21,006.97 on Tuesday, the highest close since October 18. The Tech Index jumped 3.6 per cent. The CSI 300 Index of onshore stocks climbed 2.5 per cent to near a three-week high, while the Shanghai Composite Index strengthened 2.3 per cent.

Bottled water producer Nongfu Spring surged 9.6 per cent to HK$33.25 and China’s biggest chipmaker SMIC jumped 6.4 per cent to HK$27.50. Mainland property developers also rallied, as China Overseas Land and Investments gained 2.9 per cent to HK$15.66 and Longfor Group rose 3.8 per cent to HK$13.60.

“Investors are hopeful that China will continue to support market development in some policy aspects,” said Kenny Ng, a strategist at Everbright Securities. “As the policies target domestic consumption and the real estate sector, these will be the key direction of fund deployments.”

Other notable gainers include iPhone camera lens maker Sunny Optical, which soared 14.3 per cent to HK$56.25. Fast-food chain operator Yum China rallied 7 per cent to HK$385.80 after its third-quarter earnings beat market expectations and Nomura raised its price target to HK$415 from HK$365.82.

Premier Li Qiang said China will push for an orderly opening-up of various sectors as the country welcomes outside capital. Li spoke to more than 1,000 government officials and company executives at the start of the China International Import Expo in Shanghai on Tuesday.

Elsewhere, the Caixin China PMI services index rose to 52 in October from 50.3 in September, reflecting gains in industries including retail and tourism following Beijing’s stimulus blitz in late September. A government report last week showed manufacturing grew last month for the first time since April.

“Stock market participants and real economy’s expectations have reversed after the gradual implementation of policy relaxations since late September,” said Lei Meng, China equity strategist at UBS Securities. “We expect the A-share earnings to recover notably in the first half next year.”

Other Asian markets were mixed. Japan’s Nikkei 225 jumped 1.1 per cent, while South Korea’s Kospi retreated 0.5 per cent and Australia’s S&P/ASX 200 dropped 0.4 per cent.

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