Hong Kong stocks rise as rallies from Alibaba, SMIC, other tech giants lift market sentiment
The Hang Seng Index closed high on Wednesday as investors stood firm and held onto newly unlocked shares following post-IPO lock up expiries
The benchmark Hang Seng Index finished the session up 3 per cent, while the Hang Seng Tech Index heavily outpaced the broader market, surging around 5 per cent to 4,731.
The broader technology rally also lifted major internet and hardware companies. E-commerce giant Alibaba closed more than 12 per cent higher, while smartphone maker Xiaomi surged 9 per cent. Baidu and JD.com gained 6.4 per cent and 4 per cent, respectively. Alibaba owns the South China Morning Post.
A release of restricted shares often increases market supply and can weigh on stock prices, raising concerns that early investors could sell their stocks to realise profits after strong post-listing gains. However, a sell-off failed to materialise, with analysts saying the additional supply was largely absorbed after cornerstone investors signalled intentions to retain their stakes in the company.
“When stocks have risen sharply after an IPO, investors naturally worry that early shareholders may take profits once lock-ups expire,” said Kenny Tang, chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators. “But if large institutional investors are willing to step in and absorb the shares, it can significantly ease concerns over selling pressure.”