Hong Kong stocks advanced in early deals on Wednesday, lifting the benchmark index to a four-month high, as a growing number of corporate buy-backs lifted hopes that more companies will return excess cash to shareholders and support market gains.
The Hang Seng Index jumped 2 per cent to 17,160.21 as of 11.19am local time, on track for the highest close since November 28. The Hang Seng Tech Index gained 2.7 per cent and the Shanghai Composite Index retreated 0.3 per cent.
Hang Seng Bank rallied 5.4 per cent to HK$99.15 after unveiling a share buy-back programme worth HK$3 billion (US$383.1 million). E-commerce behemoth Alibaba Group Holding gained 5.3 per cent to HK$74.20 and Tencent Holdings rose 2.8 per cent to HK$313.40. Both of the biggest constituents of the Hang Seng Index, have unveiled stock repurchases this year.
“Corporate buy-backs are a rational choice for companies that see their share prices as undervalued,” said Yin Huiwei, an analyst at Mingsheng Securities. “Buy-backs are typically one of the signs that the market has hit bottom and it means this may be a good time for investors to return.”
Some 61 Hong Kong-listed companies bought back combined HK$4.59 billion of their own stocks last week, with Tencent spending HK$3 billion for the biggest repurchase, according to Zheshang Securities.
The overall market sentiment has improved as US-China tensions ebbed following US Treasury Secretary Janet Yellen’s visit to China this week, stoking hopes buying interest could return after a four-year decline. The stock benchmark is priced at 6 times historical earnings, the lowest among major global markets, according to Bloomberg data.
Elsewhere, Li Auto added 3.5 per cent to HK$126.20 and BYD strengthened 2.5 per cent to HK$212.40 after data from the industry association showed that sales of electric vehicles in China increased 30 per cent in March from a year ago.
Other major Asian markets were broadly weaker. Japan’s Nikkei 225 slipped 0.3 per cent and South Korea’s Kospi retreated 0.5 per cent, while Australia’s S&P/ASX 200 added 0.5 per cent.