Hong Kong stocks fell by the most this week as a rebound from beaten-down Chinese technology companies stalled and a slew of disappointing earnings reports dented sentiment. The Bank of Korea became the first major central banks in the region to raise interest rates.
The Hang Seng Index slid 1.1 per cent to 25,415.69 at the close of Thursday trading while the Hang Seng Tech Index slumped 1.9 per cent. AAC Technologies crashed 10 per cent, leading index losers after its second-quarter profit trailed analysts’ estimates. Kuaishou Technology and China Evergrande sank by at least 7 per cent on deteriorating profitability.
China’s Shanghai Composite Index dropped 1.1 per cent and a similar gauge of stocks on the Shenzhen retreated 1.5 per cent. Chinese baijiu or white liquor distillers Kweichow Moutai and Wuliangye Yibin, both index heavyweights, declined on worries the government would rein in price hikes.
Buying interest subsided as bargain hunting gave way to caution amid lingering concerns about regulatory clampdown and how much that has weighed on corporate earnings. Traders are also tur ning to the Federal Reserve’s annual Jackson Hole symposium this weekend for the clues on any possible cutback in its bond purchase stimulus.
Other major markets in Asia were mixed, after US equities rose to new highs. South Korea’s benchmark gauge slipped after the central bank raised its key interest rate to become the first in the region to withdraw from an ultra-easy monetary policy.
“The tech sector has not stabilised and investors should pay more attention to the safety of capital,” Essence Securities said in a report. The business models and long-term profitability of companies face the risk of reassessment and it will take time to digest the impact on valuations, it added.
Among key movers, Kuaishou slumped 9.2 per cent to HK$70.40. The Chinese short-video platform operator said losses in the second quarter widened to 7.04 billion yuan (US$1.09 billion) and it warned that regulatory curbs will weigh on its business.
Xiaomi fell 3.6 per cent to HK$24.45, even as the Chinese smartphone maker posted an 84 per cent profit increase last quarter. Meituan, the nation’s biggest on-demand delivery service provider that is under Beijing’s antitrust probe, slipped 0.1 per cent to HK$226.80 before its earnings report on Monday.
China Evergrande, the world’s most indebted property developer, retreated 7.2 per cent to HK$4.23 after warning first-half net profit probably shrank by as much as 39 per cent from a year earlier, because of losses incurred from its property unit and new-energy car-making start-up. China Evergrande New Energy Vehicle Group tumbled 19 per cent to HK$5.18. It crashed 51 per cent this week alone.
On the mainland, Jiangxi Yuean Advanced Materials, which makes metal materials including carbonyl iron powder, surged 527 per cent from its initial public offering to 73.74 yuan on its first day of trading on Shanghai’s technology-dominant Star Market.