Hang Seng Index, China stocks advance as Moderna launches large-scale vaccine trial in US in hunt to beat Covid-19
- Tencent soars, ousting Facebook as the world’s most valuable social media network
- New Hang Seng Tech Index shoots up 3.5 per cent
Hong Kong stocks tied to the new tech index soared on Tuesday as risk-on sentiment returned, catapulting Tencent above Facebook to become the world’s seventh-most valuable company.
The new Hang Seng Tech Index of 30 top technology stocks soared 3.5 per cent as investors piled in, gripped by fear of missing out.
“The US and China conflict didn’t further escalate after closing one of each other’s consulates. Gold dropped from historical peak. Major tech stocks like Tesla [in the US overnight] zoomed and boosted sentiment,” said Alan Li, portfolio manager at Atta Capital. “Risk is on.”
In addition, American pharmaceutical manufacturer Moderna’s launch of a late-stage vaccine trial added to confidence, despite infection hotbeds in the US, Hong Kong, China and elsewhere.
The Hang Seng Index closed up 0.7 per cent to 24,772.76, snapping a two-session losing streak and last week’s big reversals after the US and China ratcheted up tensions by ordering the other to close one consulate. Still, the benchmark closed below the important 25,000 level.
Sunny Optical, with the fifth biggest weighting on the new tech index, climbed 4.5 per cent, and AAC Technologies, with the 11th largest weighting, rose 2.3 per cent.
Heavyweight Kweichow Moutai, the world’s most valuable liquor company and a favourite of Stock Connect investors, closed ahead 2.9 per cent to 1,670 yuan.
Investors will be watching closely as Moutai reports its second-quarter results at some point after market close. Jefferies boosted the company’s 12-month target price by 36 per cent to 2,010 yuan.
“The latest surge in demand out of China suggests gold could easily break US$2,000, maybe even by the end of the week,” said Stephen Innes, chief global markets strategist at AxiCorp.
He added of global equity markets, “this is not a typical market, with so much health and economic headline risk. So best to keep on your toes.”
Elsewhere in the Asia-Pacific region Tuesday, benchmark stocks rose in Seoul by 1.8 per cent, and fell more that 0.5 in Tokyo and Sydney.
Investors will be looking ahead to Wednesday’s meeting of the US Federal Reserve, which is expected to maintain its dovish tilt, with its key interest rate staying put at near zero. Meanwhile, Republicans and Democrats in the US Congress are trying to agree on a new US$1 trillion virus relief bill. Also in the US this week, tech heavyweights including Amazon, Apple, Alphabet, and Facebook report results. And the US delivers its second-quarter GDP on Thursday.
On Friday, China releases its latest Purchasing Managers Index results, following a stream of positive data in recent weeks that signalled the first country to come out of lockdowns is continuing to see economic improvement.
The virus stayed in focus, after attention turned to US-China tensions last week.
“Trump has opened the Pandora’s Box,” Eli Lee, head of investment strategy at Bank of Singapore, said of US President Donald Trump and his attacks on China as he struggles in his re-election bid. Lee called US-China tensions a “wild card” for investors.
“The market is more sensitive to action rather than talk,” Lee said, adding that acts like closing a consulate or boosting tariffs hit markets harder than mere heated rhetoric.
The virus has killed more than 650,000 people worldwide and infected 16.4 million.
Moderna soared as much as 11 per cent in US trading overnight as it began its trial of 30,000 people, as investors hope it will have a vaccine ready early next year.
