Hong Kong stocks recover as focus shifts to China's third plenum for market reforms
Hong Kong stocks reversed earlier losses and traded sightly higher amid expectations there could be supportive policy announcements after China's third plenum.
The Hang Seng Index added 0.2 per cent to 17,776.73 at the noon trading break. The Hang Seng Tech Index recovered after falling as much as 1.8 per cent. It was down 0.7 per cent at the break, while the Shanghai Composite Index was 0.1 per cent lower, as concerns remained about further US restrictions on chip sales to China.
China Resources residential property unit Mixc Lifestyle rose 2.8 per cent to HK$25.35, while Budweiser Brewing company added 3.4 per cent to HK$10.30.
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Tech stocks clawed back some of the morning's losses which contributed to the benchmark's return to positive territory.
"Investors were perhaps thinking the shunning of tech stocks during the morning session was a bit overdone," said Tim Waterer, chief market analyst at KCM Trade. "Nasdaq futures are pointing higher which also contributed to the changing mood."
Nongfu Spring company surged 5.9 per cent to HK$35.15 after a report from the Hong Kong Consumer Council, which said the company's bottled water contained bromate, was criticised by lawmakers as being misleading. The consumer watchdog has since apologised for listing the brand in an incorrect category and re-evaluated it as a five-star product.
Tech stocks struggled amid concerns of the Biden administration is floating tougher trade rules on China's chip makers, according to a report by Bloomberg. Semiconductor maker Hua Hong fell 0.5 per cent to HK$22.10 while BYD Electronic tumbled 2 per cent to HK$34.35.
The report said the US is weighing whether to impose a measure called the foreign direct product rule, and it told allies it's considering severe curbs if companies like Tokyo Electron and ASML keep giving China access to advanced semiconductor technology.
Shares in Tokyo Electron fell 9.2 per cent on Japan's stock exchange, while ASML shares plunged 11 per cent in Amsterdam. TSMC's shares fell 3 per cent to NT$999. Eyes are also on the Taiwanese chip maker's earnings due to be released later today.
Meanwhile, investors eagerly await the results of China's third plenum - the much-anticipated four-day closed door meeting of its Communist Party's Central Committee. Meeting notes will be announced later today, previous third plenum unveiled landmark policy changes that are expected to shape the nation's economic strategy in the coming years.
Investors are waiting to see whether the third plenum generates any measures conducive to growth and economic momentum.
"The Third Plenum will likely add market-oriented reforms of SOEs as an important aspect of long-term economic reform plans," said analysts at Everbright Securities in a note. "We think this involves divesting of non-core businesses and improving dividend payout ratios."
Other major Asian markets also fell. Australia's S&P/ASX 200 fell 0.2 per cent while South Korea's Kospi dropped 1.3 per cent. Japan's Nikkei 225 plunged 2 per cent.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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