HONG KONG STOCKS SET FOR WEEKLY GAIN AS MARKETS AWAIT CHINA POLICY TONIC WHILE CHOW TAI FOOK RALLIES ON SPECIAL DIVIDEND

Most Hong Kong stocks gained as the benchmark index logged a second winning week. A report showing tame inflation stoked bets policymakers in Beijing taking steps to shore up economic recovery. Chow Tai Fook Jewellery surged by the most since March on special dividends.

The Hang Seng Index was little changed near a two-week high of 19,304.88 at 11.18am local time. The index has risen 1.6 per cent since last Friday, set for the best week in more than two months. The Tech Index lost 0.2 per cent, while the Shanghai Composite Index was little changed.

Meituan jumped 0.8 per cent to HK$125.40 while Tencent added 0.1 per cent to HK$335.20. EV maker BYD gained 0.7 per cent to HK$249.60 and peer Geely Auto climbed 1.1 per cent to HK$9.50 after China announced a campaign to boost auto sales. Limiting gains, Alibaba Group weakened 0.2 per cent to HK$83.15 while JD Health dropped 3 per cent to HK$49.25.

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Chow Tai Fook, controlled by Hong Kong’s third-richest family, rallied 3 per cent to HK$14.22 after proposing to pay HK$0.72 per share as special dividend to reward investors. Revenue in the second-half trailed consensus estimates, it reported on Thursday, while same-store growth outlook disappointed markets.

While Beijing’s reaction is likely to be modest, “any stimulus or rate cuts may provide a catalyst for the Chinese economy to surprise to the upside,” said Aaron Costello, regional head for Asia at Cambridge Associates.

Consumer prices in mainland China rose by 0.2 per cent in May from a year earlier, quickening from a 0.1 per cent pace in April, the government said on Friday. Meanwhile, producer prices fell 4.6 per cent following a 3.6 per cent drop in the previous month, deepening deflation.

With China stimulus imminent, analysts differ on extent of rescue package

“The risk of deflation is still weighing on the economy,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management said in a note. Recent economic indicators send consistent signals that the economy is cooling, he added, saying China could review its policy response in July.

Three stocks debuted on Friday. CSI Solar gained 11.7 per cent to 12.40 yuan on its first day of trading in Shanghai. In Shenzhen, Qingdao Richmat Intelligence surged 106 per cent to 26.87 yuan and Minami Acoustics gained 2.8 per cent to 47.44 yuan.

Major Asian markets advanced. The Nikkei 225 in Japan gained 1.6 per cent, the Kospi in South Korea climbed 0.9 per cent, while the S&P/ASX 200 in Australia added 0.4 per cent.

More from South China Morning Post:

• Hong Kong stocks rebound after regulator pledges credit support to revive domestic demand with deposit rate cuts supporting lower loan rate hopes
• Lose your bias against Chinese stocks as the tide could turn with policy support in store, JPMorgan Private Bank says
• After US$382 billion China stock rout, Nomura and Morgan Stanley join Goldman in cutting bullish targets amid economy, earnings hurdles

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2023-06-09T04:56:30Z dg43tfdfdgfd