Hong Kong Index Extends Two-month Rebound to 20% After Insurer AIA Group Expanded Stock Buyback Plan

Li Chen
29 Apr, 2024
Hong Kong

Markets in Shanghai and Hong Kong advanced following positive earnings, and a move by the regional government to revive the property market bolstered market sentiment. 

Bargain hunters stepped up exposure to profitable tech and financial companies in the hopes that the sustained cash flow would support higher valuations. 

However, many international investors view the latest rebound in Chinese stocks as a technical and temporary bounce lacking fundamental catalysts. 

The CSI 300 index increased 1.4% to 3,634.94, and the Hang Seng index advanced 1.1% to 17,850.12. 

The Chinese yuan approached a 16-year low as the currency hovered near 7.25 against the U.S. dollar, and exporters kept revenue in foreign currencies in anticipation of devaluation in the next few weeks. 

The yield on a 10-year Chinese government bond traded near a record low of 2.35%, even after the People's Bank of China held its interest rate steady this month.

The broader benchmark index in Shanghai, tracking the largest companies in mainland China, advanced after AIA reported a 27% increase in its new value business. 

The Hang Seng index extended the previous week's gain of 8%, and the index advanced to 20% from the low reached on January 22. 

Property stocks jumped more than 5% after the Chengdu regulatory body relaxed qualification rules for new home buyers and facilitated financing for home developers. 

The move by the largest Southwestern city in China, with a population of more than 16 million, sparked speculation that other large cities may follow similar moves to revive property market activities. 

Longfor Group soared 8.5% to HK$11.94, China Resources Land added 3.4% to HK$28.90, and China Vanke advanced 19% to HK$4.91. 

AIA Group rallied 7.7% to HK$58.20 after the insurance company reported a sharp increase in its quarterly results and announced a new stock buyback program. 

New Value Business increased to $1.3 billion from $1.05 billion a year ago, and annualized new premium increased by 23% to $2.4 billion. 

The insurance company expanded its stock repurchase program by $2 billion to $10 billion, and the company said it plans to distribute 75% of its annual net new surplus funds. 

The Hong Kong-based insurance company's stock has declined 38% in 2023, despite the company reporting a 30% increase in its new business value. 

The insurance company has also ramped up its stock repurchase program following the buyback of $7.2 billion of its own shares in the last two years. 

Electric vehicle makers participated in Monday's rally, and Li Auto advanced 4.5% to HK$58.20, Xpeng added 3.9% to HK$31.50, and BYD added 2.4% to HK$217.80. 

In Asian trading, market indexes in Mumbai, Seoul, and Sydney advanced as investors overlooked the hot-inflation report in the U.S. and focused on domestic corporate results. 

Financial markets are closed in Tokyo on Monday and Friday as Japan celebrates a national holiday between April 29 and May 6, generally known as Golden Week.