Hong Kong shares advance despite rising coronavirus cases
Hong Kong shares headed for their third advance in four days on Friday, as investors appeared to look past the immediate impact of the new coronavirus on businesses and the economy.
The Hang Seng Index added 0.6% to 27,895.49 by noon. Financial heavyweights AIA Group and China Construction Bank increased 1.2% and 0.9%, respectively, while power-tools maker Techtronic Industries advanced 2.3%. Tencent Holdings added 0.6% amid expectations that the company would benefit as people staying indoors because of the coronavirus might play the company’s game titles for longer.
E-commerce major Alibaba Group Holding slipped 0.6% after Chief Financial Officer Maggie Wu warned the company’s revenue growth during the current quarter will likely be negatively affected by the coronavirus. The company late on Thursday reported a 58% jump in third-quarter net profit and a 38% increase in quarterly revenue.
The virus, first detected in Wuhan in the central Chinese province of Hubei, has rapidly spread to many other parts of the world. It has hurt tourism and various local establishments in the region, while also forcing shut several factories and schools. More than 65,000 people have been infected by the coronavirus, which has also claimed nearly 1,500 lives.
Still, markets in mainland China and Hong Kong were resilient, just as they have been over the past several days.
“I think the market just expects things to improve despite the fact that the number of infections are increasing and hundreds of people are dying every day,” said Francis Lun, chief executive at GEO Securities. He added that stocks were also underpinned by speculation that Chinese authorities may ease policies to mitigate the economic impact from the outbreak.
In the mainland, the Shanghai Composite Index advanced 0.5% while the yuan traded onshore weakened 0.1% against the U.S. dollar to 6.9819.
“I think the entire market is irrational,” Lun said. “People are looking too far ahead, maybe six months, but it will take time for China’s economy to recover from the epidemic.”
Hua Hong Semiconductor tumbled 10.6% after the company reported a 47% slump in its fourth-quarter net profit. Its revenue fell 2.5%.
Hong Kong telecommunications and media major PCCW, which on Thursday reported a 24% drop in 2019 net profit, gave up 0.2%.
Geely Automobile Holdings retreated 0.7% and Guangzhou Automobile Group shed 2.1% after the carmakers reported a decline in their respective sales volumes for January.
S-Enjoy Service Group, a property management services company, advanced 5.5% after saying its 2019 profit was expected to have increased by more than 80% from the year before.