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Hong Kong stock market
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Hong Kong stocks slip as mainland Chinese funds sell into rally amid concerns about weak Tencent and tech earnings

  • Mainland funds continue to sell, adding to their exit from the market after Wednesday’s big rally
  • Biden calls Xi a dictator at a media conference in San Francisco, risking a backlash and undoing some of the goodwill from their first meeting in a year

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People riding bicycles and scooters on the street beneath a screen showing the latest stock and economy data in Shanghai in October 2023. Photo: EPA-EFE
Jiaxing Li
Hong Kong stocks slipped as mainland Chinese funds took advantage of the market rally before the nation’s biggest tech companies report their earnings with Tencent signalling a weak trend. The first meeting in a year between Xi Jinping and Joe Biden failed to lift sentiment.

The Hang Seng Index dropped 1.4 per cent to 17,832.82 at the close of Thursday trading after surging 3.9 per cent on Wednesday to a one-month high. The Tech Index lost 1.9 per cent, while the Shanghai Composite Index declined 0.7 per cent.

Alibaba Group tumbled 1.9 per cent to HK$81.35, NetEase declined 2.4 per cent to HK$175.70 and Lenovo retreated 2.7 per cent to HK$9.52 before their report cards later today. Tencent Holdings lost as much as 2 per cent to HK$316.20 before paring losses, after third-quarter earnings fell 9 per cent from a year earlier.
The city’s benchmark index has risen by about 4.2 per cent in November, after a rout in the preceding three months. Even so, the market has struggled to sustain its rebound amid China’s stop-start economic recovery, with manufacturing shrinking and deflation deepening, while retail consumption advanced in recent reports.

Mainland investors sold HK$9.5 billion (US$1.2 billion) worth of shares in Hong Kong on Wednesday, the most in more than two months, according to Stock Connect data. They took HK$5.8 billion off the table this week, while foreign investors offloaded another 2.1 billion yuan (US$290 million) worth of mainland stocks to extend the sell-off since end-July.

“The downtrend for Hong Kong markets this year is not something that could be turned around in short term” amid China’s slowing growth and higher US rates, Angus Chan, analyst at UBS, said at a briefing on Thursday. Local stocks are likely to be range for rest of the year, with little catalysts ahead, he added.

China’s economic slowdown has forced analysts to repeatedly trim their earnings forecasts. Downgrades have outpaced upgrades this year by almost four to one for companies listed in Shanghai and Shenzhen, according to data compiled by Bank of America.

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