- Giant listing is boosting sentiment in Hong Kong, injecting much needed momentum into blue chips
- China central bank’s move to cut 7-day repo Monday seen as start of an easing cycle, pushing up China benchmarks
Hong Kong stocks saw their biggest percentage gain in two weeks, as strong reception for Alibaba's US$13.86 billion initial public offering temporarily muted concerns about the outlook of the protest-ravaged city.
China indexes also closed higher, as the market anticipates further easing measures from the central bank to support the slowing economy.
The Hang Seng Index rose 1.6 per cent, finishing at 27.093.8.
The CSI 300, which tracks blue chips listed on the Shanghai and Shenzhen bourses, closed 1 per cent higher, finishing at 3,947.04, while the Shanghai Composite Index rose 0.9 per cent, closing at 2,933.99. Both percentage gains were the biggest since November 1.
Hong Kong's stock market bulls shrug aside city's street protests
Despite Hong Kong still being rocked by an ongoing tear-gas and firebomb stand-off staged between hard core protesters and police over the past few days, the ongoing marketing of Alibaba Group's IPO lifted the index. Alibaba's secondary listing could raise up to US$13.86 billion and is expected to catapult Hong Kong back to the top global IPO capital ranking.
According to a Reuters story citing unnamed sources, Alibaba is closing book earlier than expected from prospective institutional investors due to strong demand. Alibaba, which owns the South China Morning Post, begins trading in Hong Kong on November 26.
Benefiting from the listing excitement, Hong Kong Exchanges and Clearing rose 2.8 per cent to HK$251.8.
US ranks lower than China, even protest-hit Hong Kong, for Chinese IPOs
Alvin Cheung, an associate director at Prudential Brokerage, observes that generally, the broader market performance improves as the pricing and listing of a new mega-sized IPO approaches.
"Generally institutional investors, particularly those involved in the preparation work of IPOs, would be incentivised to avoid selling down a market as a way to create favourable market conditions for the listing," he said.
Leading the index higher was social media giant Tencent, which rose 2 per cent to HK$336.6. Banks also did well, with China Construction Bank rising 1.7 per cent to HK$6.42. Meanwhile, insurer AIA rose 1.3 per cent to HK$79.5.
Snack and beverage maker Want Want China surged 4.5 per cent to HK$6.68, after it reported that net profit attributable to shareholders for the six months ended September rose 18.4 per cent to 1.6 billion yuan.
Stocks Blog: Want Want China shoots up on results; Tencent gains
Cheung however expects the HSI will see upside capped at the 27,800 level this week.
In Shanghai, leading the index higher was Jiangsu Hengrui Medicine, which rose 2.9 per cent to 95.63 yuan. Meanwhile, distiller giant Kweichow Moutai rose 0.4 per cent to 1,232.32 yuan, and Industrial and the Commercial Bank of China rose 0.5 per cent to 5.85 yuan.
"Market sentiment continues to improve, thanks to the 180 billion yuan liquidity injection by China's central bank as it cut the 7-day reverse repo rate to 2.5 per cent for the first time in four years. That has been taken by the market to expect more supportive monetary measures will follow in the near term," said Cheung.
Gains on the Shenzhen Component were even larger, 1.8 per cent, sending the index to 9,889.75.
Mobile gaming-related stocks pushed the Index higher in Shenzhen, with many jumping to the 10 per cent daily limit.
These include Wuhu Sanqi Interactive Entertainment Network Tech, to 21.49 yuan; Perfect World, to 33.64 yuan; and Hangzhou Shunwang Tech, to 23.31 yuan.
As Google launches its cloud gaming service, Stadia, mainland investors are betting that leading Chinese cloud computing giants Alibaba and Tencent will also launch more cloud gaming services, opening more business opportunities for game developers. Tencent has launched its cloud gaming solution this year.
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