Dow Jones Newswires: Hong Kong consumer stocks gain on plan to ease Shanghai lockdown

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Hong Kong-listed consumer stocks are higher in early trade as sentiment is buoyed by the Shanghai government’s plan to loosen COVID-19 restrictions on June 1 as daily case counts decline.

“We believed that there will be a rebound in consumption after the unlocking,” analysts from brokerage KGI Securities say.

The local government a number of supportive measures as well, including reducing rent and property taxes for businesses, and granting subsidies for water, electricity and natural-gas costs, state media outlet Xinhua reported over the weekend.

“Measures will also be adopted to stabilize foreign capital, encourage consumption and expand investment,” it said.

Consumer stocks are pulling the benchmark Hang Seng Index higher Monday morning, led by apparel group Li Ning Co.
2331,
+8.07%
,
hotpot chain Haidilao International Holding Ltd.
6862,
+7.92%

and brewer China Resources Beer (Holdings) Co.
291,
+6.99%

which are up 8.2%, 6.4% and 6.3%, respectively. The HSI
HSI,
+2.09%

is up 2.2%.

Analysts from KGI Securities say this presents a buying opportunity, and view China Resources Beer as particularly attractive. Not only has the brewer’s stock dropped sharply due to the COVID-19 outbreak, but it is expected to post 26% growth in 2023 earnings per share, they say. Shares are down 26% so far this year.

The measures should be supportive of Hong Kong stocks in general as they could calm some of the concerns about COVID-19 risks, IG market strategist Yeap Jun Rong said.

However, Yeap noted that previous fiscal measures “were met with only a lukewarm reaction in the markets, suggesting that some reservations may remain.” This is because China’s “strict virus stance suggests that any [future] outbreaks will still be met with heavy economic restrictions,” he said.

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