Hong Kong stocks reach one-week high as China injects US$17 billion into slowing economy while Alibaba, Tencent power tech gains

Government reports signal a slowdown in China’s economic activity last quarter, while the central bank injects US$17 billion into the system
BYD slips after major shareholder Himalaya Capital cut its stake in Chinese carmaker’s H shares again

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 9:52am, 15 Jul 2021

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Hong Kong stocks rose to a one-week high as China injected liquidity to ease a crunch in the system amid reports showing the economy lost some growth momentum last quarter.

The Hang Seng Index gained 0.8 per cent to 27,996.27 at the close of Thursday trading, the highest level since July 6. The Hang Seng Tech Index was little changed while the Shanghai Composite Index added 1 per cent.

Banks led winners in the city after the People’s Bank of China unleashed a combined 110 billion yuan (US$17 billion) of liquidity through open-market operations and a cut in the reserve requirement ratio that kicked in on Thursday. Alibaba Group Holding and Tencent Holdings advanced more than 2 per cent.

China’s economy grew 7.9 per cent last quarter from a year earlier, versus 18.3 per cent in the preceding three months, the National Bureau of Statistics said on Thursday morning. That was below the estimate of 8 per cent growth in a Bloomberg survey of economists. Industrial production and retail sales for June also slowed, though they outperformed market consensus.

Major indicators are pointing to “normalising but still resilient domestic demand in June, particularly in consumption,” said Zhu Chaoping, a strategist at JPMorgan Asset Management in Shanghai, in a note to clients. “Overall, China’s economy looks to be on track for recovery, with the 6 per cent annual growth goal in reach. However, downside and structural risks in domestic demand are concerning.”

The central bank’s cash injection through the lending facility and the reverse-purchase agreement was a sign that the monetary policy will continue to remain accommodative to aid growth. The move was to counter possible liquidity squeeze caused by the peak season for tax payments, it said in a statement.

China Construction Bank advanced 2.2 per cent to HK$5.58. BOC Hong Kong and Industrial and Commercial Bank of China rallied by at least 1.6 per cent. Local stocks also got a boost after the Post reported that the city will allow the arrivals of vaccinated people from high-risk countries from next week.

Alibaba, the owner of this newspaper, climbed 2 per cent to HK$210.60 and Tencent added 1.5 per cent to HK$565. The Chinese tech giants are said to be considering opening up their e-commerce ecosystem to each other, The Wall Street Journal reported on Wednesday. The move is seen as breaking down the barriers for competition in the lucrative market.

BYD slumped 7.2 per cent to HK$213.80 after one of its largest shareholders sold more H shares in the Chinese electric-vehicle maker. Himalaya Capital trimmed its stake to 6 per cent from 8.2 per cent in the past week, raising US$309 million, according to exchange filings.

Three companies started trading in Hong Kong. Chinese property-management company Dexin Services was unchanged from its initial public offering price at HK$3.06. Medlive Technology, which offers online clinical treatment, gained 14 per cent to HK$31. BetterLife Holding, an automotive retailer, surged 25 per cent to HK$5.50.

Three companies also debuted on the mainland’s exchanges. Shenzhen Breo Technology, which makes massage products, was the best performer, surging 525 per cent to 171.18 yuan on Shanghai’s Star Market.