Hong Kong stocks slump as Chinese tech giants step up rivalries, HSBC in focus as market await corporate earnings boost

JD.com and Meituan are intensifying competition with industry rivals to win over consumer dollars

HSBC’s fourth quarter pre-tax profits doubled from a year earlier as bank considers bigger dividend from asset sales

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The rally in Hong Kong stocks since late October is waning amid a selldown by global hedge funds. Photo: SCMP

Published: 10:34am, 21 Feb 2023Updated: 5:01pm, 21 Feb 2023

Hong Kong stocks slumped amid signs China’s reopening will intensify competition for consumer dollars and erode margins among big tech businesses. A better-than-expected report card from HSBC failed shore up the market.

The Hang Seng Index declined 1.7 per cent to 20,529.49 at the close of Tuesday trading, the biggest drop in over a week. The Tech Index tumbled 3.6 per cent while the Shanghai Composite Index added 0.5 per cent. The benchmark index has lost nearly 5 per cent in the past two weeks as hedge funds withdrew from the market.

JD.com slumped 9.4 per cent to HK$188, Alibaba Group fell 5 per cent to HK$94.40 and Tencent dropped 4.5 per cent to HK$360, while Meituan slipped 4 per cent to HK$139.90. HSBC fell 2.4 per cent to HK$57.35, despite making higher profit last quarter.

JD.com is launching a US$1.5 billion subsidy campaign to take on rival e-commerce platform owned by PDD Holdings, while food delivery group Meituan is expanding its footprint into Hong Kong. Competition is also heating up in China’s car industry, as battery makers and car producers engaged in price discounting.

Fourth-quarter profit warnings and preliminary results by Chinese companies have so far been “soft” due to the Covid-19 disruptions, Goldman Sachs said in a February 20 report. “A noticeable inflection point” in the earnings cycle may only emerge this quarter, it added.

“The coming results announcement will be the key” to sustain the stock rally, said Kenny Wen, head of investment strategy at KGI Asia in Hong Kong. “Hong Kong stocks are still in a consolidation phase, it will take time to digest the recent rally.”