Strong Consumer Turnout Drives Hong Kong Stocks Higher Friday As China's Former Premier Li Keqiang Dies At 68

Hong Kong stocks rallied Friday as the week closed out higher for consumer stocks and EV makers which investors hope will be the beneficiary of a forthcoming government stimulus.  

The Hang Seng Index ended the day 2.1% higher at 17,398.73 while China’s CSI 300 Index rose 1.4% to 3,562.39.

Financials also closed out mostly higher while property firms were sharply up on hopes that if the government steps in there may be an end in view to the wave of defaults that have besieged corporate bond markets this year.

Short-selling volumes dropped by about a quarter from a day earlier to 17.4% of all transaction volumes on the Hong Kong Stock Exchange.

Reports of successful Single’s Day presales promotions for Alibaba Group Holding BABA and JD.com Inc JD continued to push those stocks higher, which have been heavily beaten-down throughout 2023.

Chinese consumers are currently sitting heavily on cash as revealed by substantially higher deposits on China Construction Bank’s CICHY earnings statement Thursday. As such, retailers are looking to take advantage of the sales opportunity during the country’s November sales season. Competitive discounts and a slew of brand-new product offerings this week have seen record sell-out times for Alibaba and JD.com, according to local reports.

Alibaba told the Chinese language media Friday that over 1,300 brands sold about triple the volume of what they did last year in the first hour of its TMall platform sales Tuesday this week. About 700 brands sold over 5x what they did in the same period last year, the company added. Alibaba also said that leading European and American fashion brands, including Nike Inc NIKE, made over RMB100 million ($13.7 million) in sales each within that hour.

Among other consumer names, Tencent Holdings Limited TCEHY got a boost after Hong Kong’s second-largest IPO this year, for J&T Global Express Limited, went live. Tencent is the lead cornerstone investor in the IPO with over 10% of the share allotment. The IPO was oversubscribed by about one and a half times.

Short-selling among consumer names dipped to less than 10% of daily turnover according to traders, with Alibaba seeing just 9.9% of its trading volume represented in short plays, Meituan MPNGY at 6.9% short turnover ratio and Tencent at just 4.5%.

After a 20% decline following an earnings disappointment Thursday, Li Ning repurchased HK$205 million ($26.3 million) of its stock Friday, or around 0.35% of its entire market capitalization, for between HK$23.5 and HK$25.04 a share, helping the stock rise over 3% by day’s end.

Alibaba, Meituan and JD.com Inc all finished the day 3% higher, while J&T Global Express held on to its HK$12 offering price by the end of the day’s trading.

EV names were also sharply higher, with Nio Inc NIO closing up 2.4%, XPeng Inc XPEV 5% higher and Li Auto Inc LI 3.8% stronger on the day after news that Tesla Inc TSLA scrapped a discount on its bestselling Model Y EV on the Chinese mainland.

Other active heavyweight stocks on the Hong Kong Stock Exchange included financials China Construction Bank, AIA Group AAGIY and Ping An Insurance Group PNGAY, which all rose despite short-sellers still targeting the stocks heavily. Short turnover for each of the three companies was between 18%-37% with the highest for AIA, indicating investors are still bearish about the health of Chinese financial firms.

Pharma names did the best of all sectors on hopes that a government stimulus would target the sector heavily, with Hansoh Pharma HNSPF 12% higher, Sino Boipharmaceuticals Limited SBMFF up 10% and Wuxi Biologics WXXWY rising 7.3% on the day.

In other news, Li Keqiang, China’s former premier, died suddenly of a heart attack shortly after midnight Friday at 68 years old. Li was one of China’s most popular leaders in history, mostly presiding over a period of 8%+ annual economic growth for the world’s second largest economy and hailing in an era of what is viewed as more liberal capitalist style politics on the mainland.