Hong Kong stocks erase losses on fund, rating shift while Black Sesame sinks in IPO debut

The Hang Seng Index gained 0.7 per cent to 16,998.45 at the local noon trading break, extending a 1.4 per cent gain on Wednesday. The Tech Index climbed 0.9 per cent and the Shanghai Composite Index added 0.4 per cent.

Japan’s Nikkei 225 added 0.6 per cent in volatile trading, while South Korea’s Kospi declined 0.4 per cent and Australia’s S&P/ASX 200 slipped 0.1 per cent, tracking overnight losses in US stocks.

Social-media giant Tencent rallied 2.4 per cent to HK$372.20 and China Merchants Bank added 2.2 per cent to HK$32.25, while Alibaba Group Holding strengthened 1.8 per cent to HK$77.90. Gold miner Zijin Mining slipped 0.5 per cent to HK$14.98 after China’s central bank held off bullion purchases for a third consecutive month in July.

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Why investors can expect more market volatility after recent global stock sell-off

Why investors can expect more market volatility after recent global stock sell-off

“China-linked assets are becoming a better option for global investors on the backdrop of the global turmoil triggered by the concern about the US recession and the crowded trade,” said Zhang Qiyao, an analyst at Industrial Securities in Shanghai. “The valuations of China assets are at depressed levels.”

A technical gauge on volatility in Hang Seng Index members has remained steady this week, while those measuring price swings in MSCI Asia-Pacific Index and Nikkei 225 rose to the highest in four and 10 years, respectively, according to Bloomberg data.

Montreal-based BCA Research raised its rating on Chinese offshore stocks to neutral from underweight, while lifting its call on onshore shares to overweight from neutral in a report on Wednesday. Chinese risk assets may suffer less if their global peers fall into bear markets, it said.

Investor sentiment remains shaky, roiled by worries about a recession in the US and the Bank of Japan’s unexpected monetary tightening. A global sell-off in aggressively-priced AI-driven semiconductor companies also spooked traders.

Meanwhile, consumer prices in China probably rose 0.3 per cent in July from a year earlier, versus 0.2 per cent in June, according to consensus among economists tracked by Bloomberg before an official report on Friday. Producer prices probably fell 0.9 per cent, a 22nd consecutive month of deflation, the data showed.

Elsewhere, Black Sesame International, a Chinese company that designs semiconductor chips for autonomous driving, sank in its trading debut. The stock slid 25 per cent to HK$21.05 from its stock offering price of HK$28.