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Screens showing the index and stock prices outside Hong Kong Exchange Square (HKEX) in Central. Photo: Sun Yeung
BusinessChina Business

Hong Kong stocks jump to five-month highs on earnings optimism as China earnings kick into high gear

  • Ping An Insurance reported growth in its new-business values, a gauge of future profitability, which beat estimates in the first quarter
  • Goldman Sachs and UBS have upgraded their assessment of Chinese stocks citing corporate earnings strength, Beijing’s policy support and capital market reforms
Hong Kong stock market
Zhang Shidong
Zhang Shidongin Shanghai
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Hong Kong stocks advanced for the third straight day on Wednesday, propelling the benchmark index to its highest close in five months, as investors bet that corporate earnings recovery will drive valuations with a host of company results due to be unveiled this month.

The Hang Seng Index rose 2.2 per cent to 17,201.27 to close at its highest since November 28. The Hang Seng Tech Index jumped 3.6 per cent and the Shanghai Composite Index added 0.8 per cent.

Ping An Insurance advanced 4.2 per cent to HK$34.40, and Hong Kong Exchanges and Clearings (HKEX), the operator of the city’s bourse, added 3.6 per cent to HK$239, after their first quarter earnings beat consensus estimates.

“Investor positioning is very, very light and expectations on earnings is quite conservative,” said Tai Hui, a strategist at JPMorgan Asset Management in Hong Kong. “I do think that China earnings can do OK this year. So, the bar to do well is quite low. That’s where people are looking into China.”

A host of Hang Seng Index companies are expected to post first-quarter results through the end of May and earnings are expected to be the key drivers in the weeks ahead. UBS Group raised its weightage on both Chinese and Hong Kong stocks to overweight from neutral in its model portfolio this week, citing corporate earnings strength and Beijing’s policy support. Meanwhile, Goldman Sachs sees a potential 40 per cent upside in Chinese stocks after the State Council issued guidelines on capital market reforms this month.
The logo of Ping An Insurance seen at a Beijing event. Photo: Reuters

Investors focused on Ping An’s 21 per cent increase in the new business value, shrugging off a slight decrease in first-quarter profit.

“Life insurance business beat our estimates in terms of both profit and new business value,” said Nomura analysts after the earnings announcement in a note. The Japanese brokerage, which said first-quarter profit for Ping An was 4 per cent above its estimate, raised its price target for the stock to HK$54.41, implying an upside of almost 60 per cent from the current level.

Elsewhere, SenseTime Group, which makes chips for artificial intelligence (AI), rose as much as 36 per cent after releasing the latest version of its SenseNova generative AI model. The stocks surged 31 per cent to HK$0.80 before trading in its shares was suspended pending an exchange statement on possible inside information.

“In terms of linguistic and creative capabilities, the creative writing, reasoning, and summary abilities of SenseNova 5.0 have significantly improved,” the company said in a statement.

Elsewhere, Tianqi Lithium, a producer of the metal used for batteries powering electric vehicles, slumped 19 per cent to HK$28.50 after warning it could post a loss of as much as 4.3 billion yuan (US$593.4 million) in the first three months of the year.

Mobvoi, which makes speech recognition devices, declined 3.2 per cent from its IPO price to HK$3.68 on its trading debut in Hong Kong.

Other major Asian markets mostly rose. Japan’s Nikkei 225 climbed 2.4 per cent, while South Korea’s Kospi advanced 2 per cent, while Australia’s S&P/ASX 200 was little changed.

With additional reporting by Aileen Chuang.

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