Update | Hong Kong stocks fall as Tencent’s gaming revenues disappoint and PBOC raises rates
Tencent accounts for almost half of the decline on the Hang Seng Index after Nomura and Citigroup said its fourth-quarter gaming revenues had missed forecasts
Hong Kong ‘s stocks dropped by the most in two weeks, as Tencent Holdings’ gaming revenues trailed estimates and China’s central bank raised borrowing costs following an overnight rate increase by the Federal Reserve.
The Hang Seng Index fell 1.1 per cent, or 343.47 points, to 31,071.05 at the Thursday close, its biggest decline since March 5. The Hang Seng China Enterprises Index, known as the H-share gauge, retreated for a fifth day with a 0.8 per cent drop. The mainland’s equity benchmark also fell on concern tightening liquidity will restrain large-caps with stretched valuations.
Tencent, the biggest weighting on the city’s benchmark gauge, slumped the most in six weeks after Nomura Holdings and Citigroup said fourth-quarter gaming revenues from the Chinese technology juggernaut had surprisingly fallen short of forecasts. The stock made up almost half of the loss on the Hang Seng Index on Thursday.
“The fact that Tencent’s revenue from online games had decreased is pressuring the stock market,” said Kingston Lin King-ham, director of AMTD securities brokerage.
Tencent tumbled 5 per cent to HK$439.40, its steepest loss since February 6. Fourth-quarter sales of 66.4 billion yuan (US$10.5 billion) were 3 per cent below consensus, owing to lower-than-expected online gaming revenue, Nomura said. Citigroup lowered its share-price estimate of the stock by 1 per cent, citing the same reason.
Tencent’s full-year profit in 2017, which was released after the market closed on Wednesday, beat analysts’ projections by 0.8 per cent, according to Bloomberg data.