Tencent, Alibaba lead Hong Kong stock gains on earnings tonic while HSBC erases drop as banks hold rates after Fed, HKMA act

Hong Kong stocks jumped by the most in three weeks as Tencent Holdings rallied after stronger than expected results, boosting confidence about corporate earnings outlook. Property developers advanced as local lenders refrained from raising borrowing costs to support growth.

The Hang Seng Index rose 2.3 per cent to 20,049.64 at the closing of Thursday trading to claw its way up from a three-month low. The Tech Index surged 4.7 per cent while the Shanghai Composite Index added 0.6 per cent.

Tencent jumped 7.5 per cent to HK$373.20, while Alibaba Group gained 3.9 per cent to HK$86.05. Sunny Optical advanced 5.4 per cent to HK$97.05, while shipping giant Orient Overseas International surged 16.3 per cent to HK$151.80.

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Sun Hung Kai Properties added 0.4 per cent to HK$106.60, and Henderson Land rose 1.1 per cent to HK$27, leading gains among Hong Kong developers. HSBC climbed 0.1 per cent to HK$53.55 after losing as much as 2 per cent. The city's biggest lender and other peers today kept their prime rate unchanged.

The Federal Reserve raised its key rate by a quarter point to a range of 4.75 per cent to 5 per cent overnight, while the Hong Kong Monetary Authority moved in lockstep to lift its base rate on Thursday to 5.25 per cent, a 15-year high. Most analysts contacted by the Post expected the city's commercial banks to hold their prime rates.

"Hong Kong stocks might have already bottomed," analysts at Huatai Securities said in a note on Thursday. Local investors are gradually turning back to the risk-on mode as concerns over the banking crisis have eased, and the market now expects a more dovish Fed, they added.

The Hang Seng Index has climbed 2.5 per cent this week after regulators worldwide rallied to prevent the banking crisis from worsening. The US$450 billion market correction since the January 27 peak is over, and investors can now be more positive on the local market outlook, said Wang Qi, CEO of MegaTrust Investment in Hong Kong.

Tencent's earnings rose 12 per cent to 106.3 billion yuan (US$15.5 billion) last quarter while revenue increased 1 per cent, helped by cost-cutting measures and one-off income from the sale of its equity stake in Meituan. Annual loss in 2022 was also narrower than predicted.

China (and Thailand) produced more companies that beat consensus expectations in recent fourth-quarter report cards, Goldman Sachs said in a note on March 17. Profit upgrades involving Hang Seng Index members have surpassed downgrades in March, the first time in 19 months, according to Huatai Securities.

Elsewhere, key Asian markets were mixed on Thursday. The Nikkei 225 in Japan dropped 0.2 per cent and the S&P ASX 200 Index in Australia weakened 0.7 per cent, while the Kospi in South Korea gained 0.3 per cent.

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