Hong Kong Leads Rally in Asia on Bets Golden Week May Lift Mood

Stocks in Hong Kong surged the most in four weeks, beating Asian peers, on bets spending during China’s Golden Week holiday would provide a much-needed boost to sentiment marred by the country’s property sector crisis.

(Bloomberg) — Stocks in Hong Kong surged the most in four weeks, beating Asian peers, on bets spending during China’s Golden Week holiday would provide a much-needed boost to sentiment marred by the country’s property sector crisis.

The Hang Seng Index and a gauge of Chinese stocks rallied about 3% each in Hong Kong trading, with traders citing optimism over Chinese consumption during the peak travel season and dip buying as reasons for the rebound. Mainland markets are closed on a holiday through the end of next week. 

Read: China Traders Hang Hopes on Boost From Golden Week

Activity around Chinese shopping malls remained at relatively high levels in September following an increase in August, according to SpaceKnow, a US company that analyzes satellite images. Stocks of shopping mall operators in Hong Kong climbed in anticipation of greater tourists arrivals from mainland for Golden Week celebrations.

“We are beginning to find a floor from a valuation standpoint and it would not take much good news to start seeing some of these shares move upward,” Derrick Irwin, portfolio manager, Allspring Global Investments told Bloomberg Television. Irwin cautioned that continued weakness in China’s property sector could “further hit the consumers.”

Read: Xi Says China to Step Up Efforts to Meet Annual Economic Goals

Rally in Hong Kong also provided a lift to the region’s equity market, with the MSCI Asia Pacific Index climbing 0.4%. Friday’s gain helped trim losses for the quarter to less than 4%. “It looks like a broad relief rally across the region after a week of declines,” said Marvin Chen, a strategist at Bloomberg Intelligence. 

The regional benchmark is still set to decline after three straight quarters of gains, lagging behind peers in the US and Europe. China’s deepening property crisis and the higher-for-longer rates narrative have made emerging market assets less appealing to investors.  

Sectors to Watch

  • India’s technology stocks fell after global peer Accenture reported its fourth-quarter results and gave a weaker-than-expected outlook, which some analysts see as a negative readthrough for the sector.
  • Owners of Hong Kong’s shopping malls including Hang Lung Properties rose on optimism that the city will see a surge in tourists during China’s Golden Week holiday.
  • Asian suppliers to Nike climbed after the company reported a drop in its stockpile of inventory — a sign it is making progress in moving out older merchandise for newer, more-profitable items.
  • Chinese developer stocks such as CIFI Holdings advanced on Shenzhen’s plans to relax the floor for mortgage rates on first-home purchases, the first of China’s four-biggest cities to make such a move.
  • Paladin Energy and other Australian uranium miners followed overseas peers higher on the prospect of higher power demand in Europe.

Markets at a Glance

  • MSCI Asia Pacific Index rises 0.3%
  • Japan’s Topix Index falls 1.3%; Japan’s Nikkei Index declines 0.5%
  • Hong Kong’s Hang Seng Index rises 2.7%; Hong Kong’s Hang Seng China Enterprises Index gains 2.8%
  • Australia’s S&P/ASX 200 Index climbs 0.4%; New Zealand’s S&P/NZX 50 Gross Index rises 1.1%
  • India’s NSE Nifty 50 Index rises 0.3%
  • Singapore’s Straits Times Index rises 0.4%; Malaysia’s KLCI falls 0.8%; Philippine’s PSEi falls 0.6%; Indonesia’s JCI rises 0.3%; Thailand’s SET Index falls 0.4%; Vietnam’s VN Index gains 0.4%
  • The yield on 10-year Treasuries advances 0.5 bps to 4.58%
  • West Texas Intermediate crude falls 0.1% to $92 a barrel
  • Bloomberg Dollar Spot Index falls 0.1%
  • Euro rises 0.1% to $1.06

Related Market News

  • Taking Stock: Whoever wins next month’s general election in New Zealand will inherit one of Asia Pacific’s worst-performing stock markets, with more downside likely ahead.
  • Global Wrap: Stocks in Asia looked set to post the biggest quarterly decline in a year, while oil’s rally faltered and Treasury yields ticked higher.

Here Are the Most Notable Movers

  • Multi Commodity Exchange of India declines as much as 8.6%, the most since June 30, after the exchange operator said it has been asked by the Indian markets regulator Securities and Exchange Board of India to keep its new commodity derivatives trading platform in “abeyance.“
  • Adani Green Energy and Adani Transmission decline as Abu Dhabi-based International Holding Co., which has invested almost $2 billion in Gautam Adani’s conglomerate, plans to sell its stake in the two companies.
  • Delta Electronics (Thailand) Pcl tumbles as much as 14% after its parent sold about 89.2 million shares of the Bangkok-listed company at 94.75 baht each in a block trade. The terms of the deal were seen by Bloomberg News.
  • New China Life drops as much as 5.3% in Hong Kong after the insurer was downgraded by Morgan Stanley, which cited the sector’s challenges in bond and equity investment returns amid China’s sluggish economy.
  • Zhejiang Leapmotor Technologies drops as much as 1.3% in Hong Kong after the end of a lock-up period determined in its initial public offering.

This story was produced with the assistance of Bloomberg Automation.

Story Link: Asian Stocks Gain, Paring Quarterly Loss, as Hong Kong Rallies

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