Hong Kong stocks: Hang Seng falls below 19,000 tripped by Alibaba, NetEase; hawkish US Fed sours risk appetite

Alibaba’s tumbled by the most in over three months on reports it is planning a US$5 billion convertible bond sales to fund growth

Corporate profit recovery could remain under pressure as deflation pressure persists, BCA Research analysts said

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Pedestrians walk past Exchange Sqaure in Central. Photo: Eugene Lee

Published: 10:59am, 23 May 2024Updated: 5:37pm, 23 May 2024

Hong Kong stocks declined for the third straight day, with the benchmark breaching the 19,000 psychological support, weighted down by tech leader Alibaba and NetEase. Sentiment also weakened after hawkish comments from US Federal Reserve officials.

The Hang Seng Index lost 1.7 per cent to 18,868.71 at the closing of Thursday trading, its lowest level in two weeks. The Tech Index lost 2.4 per cent while the Shanghai Composite Index weakened 1.3 per cent.

All but seven out of the 82 index members declined. Gaming firm NetEase lost 7.8 per cent to HK$141.50 and smartphone maker Xiaomi lost 2.6 per cent to HK$18.94 before their earnings release. Li Auto dropped 4.1 per cent to HK$78.90, leading losses among EV shares.

E-commerce behemoth Alibaba tumbled 5.2 per cent to HK$78.65, the biggest drop in over three months, after Bloomberg reported quoting unidentified sources that the company plans to issue US$5 billion convertible bonds to fund growth. Such issuance has the potential to dilute earnings, analysts say.

Peer JD.com lost 4.1 per cent to HK$123.70. Rival PDD’s 131 per cent surge in revenue last quarter and market share gains also pressured the duo amid intensive competition.

The logo of Temu, an e-commerce platform owned by PDD Holdings, is seen on a mobile phone displayed in front of its website, in this illustration picture taken April 26, 2023. Photo: Reuters

“The Hong Kong market is currently experiencing a correction, while the local market sentiment is approaching a low point,” analysts at Horizon Insights, an independent research firm, said in a note on Wednesday. The market now needs to see stronger economic readings for May to find reasons to continue the rally, they added.