Hong Kong stocks gain after holiday as traders react to upbeat Chinese manufacturing data

Before today, the Hang Seng Index had declined 9.8 per cent since a peak on May 20, as traders took profit from a bull-run that started in April

Hong Kong stock market

Jiaxing Li

Published: 10:40am, 2 Jul 2024

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Hong Kong stocks gained as traders returned after a public holiday and reacted to upbeat Chinese manufacturing data that eased some concerns about the economic outlook.

The Hang Seng Index added 0.3 per cent to 17,769.14 at the close of Tuesday trading, climbing from a two-month low. The Tech Index gave up earlier gains to to finish the day down 0.4 per cent, while the Shanghai Composite Index was little changed after a 0.9 per cent gain on Monday.

Li Auto jumped 5 per cent to HK$73.80, leading gains among electric-car makers after strong monthly sales. Property developer Longfor surged 3 per cent to HK$11.04 and China Resources Land jumped 3 per cent to HK$27.35 after a decline in home sales eased in June.

Oil giant CNOOC rallied 4.5 per cent to HK$23.40 and PetroChina climbed 4.2 per cent to HK$8.23.

A private report released on Monday pointed to a better-than-expected expansion in China’s factory activity. The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rose to 51.8 in June from 51.7 in the previous month, marking the fastest clip since May 2021 and defying analysts’ forecasts of a drop to 51.2.

That helped alleviate disappointment over the official PMI data, which stood at 49.5 in June – indicating contraction – unchanged from May.

The Hang Seng Index declined 2 per cent in June, marking the first loss in five months. This brought the total drop since its peak in late May to 9.8 per cent, which means the market has given up almost half of the gains from the policy-driven bull run as traders cashed out.

“The Hang Seng Index could easily find support at this level” following the recent downturn, Kevin Liu, equity strategist and managing director at CICC, said in a note on Sunday. Looking ahead, improving domestic fundamentals and policy catalysts could lend the market more support, he added.

Elsewhere, French beauty retailer L’Occitane Group, the controlling shareholder of Hong Kong-listed L’Occitane International, has made a tender offer to acquire all issued and outstanding shares it does not already own to privatise the company.

Minority investors can choose either rollover shares in the offeror, or receive HK$34.00 in cash per share, according to the filing.

Other key Asian markets were mixed. Japan’s Nikkei 225 added 1.1 per cent, South Korea’s Kospi declined 0.8 per cent, and Australia’s S&P/ASX 200 dropped 0.4 per cent.