Hong Kong stocks retreat as China’s data misses projections and Sunny Optical plunges
The Hang Seng Index has fallen 3pc in the past three days
Hong Kong’s stocks dropped for a third day, as a key set of China’s economic data trailed estimates and Sunny Optical Technology Group slumped the most on record after reporting earnings that missed analysts’ projections.
The Hang Seng Index sank 0.7 per cent at the close on Tuesday, capping a three-day, 3 per cent decline. The mainland’s Shanghai Composite Index fared better, finishing the day with a loss of 0.2 per cent.
China’s weak economic data further weighed on the already fragile market sentiment that was earlier buffeted by a crash in the Turkish lira. July figures on industrial output, retail sales and fixed-asset investment released by the statistics bureau on Tuesday morning all missed the economists’ estimates surveyed by Bloomberg. Aggregate financing and money supply announced by the China central bank a day earlier also failed to convince investors that the economy was already underpinned by easier funding.
“The weak sentiment on the market will linger as the fundamentals of the economy are pretty poor, particularly the fixed-asset investment that decelerated a lot,” said Ken Chen, a strategist at KGI Securities in Shanghai. “That’ll unnerve investors particularly at a time of the Turkish crisis and the prolonged trade war between China and the US.”
The Hang Seng Index fell 183.64 points to 27,752.93 at the close. The Hang Seng China Enterprises Index, or the H-share gauge, slid 0.2 per cent.
Sunny Optical, China’s biggest maker of smartphone camera modules and lenses, plunged 24 per cent to HK$91.90, the steepest decline since its listing in 2007. The company was the worst performer on the Hang Seng Index on Tuesday, accounting for more than a third of the benchmark’s decline.
First-half profit rose 1.8 per cent from a year earlier to 1.18 billion yuan (US$171.5 million), compared with the estimate of 1.52 billion yuan in a Bloomberg survey. Net profit margin slipped about 2 percentage points to 9.9 per cent in the period, because of decreased gross profit margins of handset camera modules and a foreign exchange loss incurred from a bond sale, Sunny Optical said in an exchange filing.
The sell-off also extended to other Chinese technology stocks trading in the city. AAC Technologies Holdings lost 7.2 per cent to HK$85.75. Tencent Holdings slid 3.4 per cent to HK$348.60 after the tech giant was told by the regulator to pull Monster Hunter: World, one of the most popular video games, from its gaming platform just days after its launch.
China Literature, the e-book unit spun off from Tencent, slumped 17 per cent to HK$55.60 after agreeing to buy New Classics Media from its controlling shareholder for 15.5 billion yuan.
In the mainland, the Shanghai Composite slipped 4.91 points to 2,780.97. The CSI 300 Index of big-caps shed 0.5 per cent and the ChiNext gauge of smaller companies lost 0.8 per cent.
Combined turnovers on the Shanghai and Shenzhen bourses decreased to 268.3 billion yuan, the lowest level in six months, according to Bloomberg data.
Developers led the decline on expectations that further measures will be rolled out to contain rising home prices. Shanghai Wanye Enterprises tumbled 5.2 per cent to 11.23 yuan and Poly Real Estate Group sank 3.6 per cent to 11.06 yuan.
ZTE jumped 5.9 per cent to 16.30 yuan in Shenzhen after MSCI said the telecommunication equipment maker would be added to its MSCI China Index starting next month. ZTE and nine other yuan-traded A-share companies will be included in the index compiler’s global benchmarks, increasing to 236 the total number of such stocks. Chinese stocks’ weighting in the MSCI Emerging Markets Index will almost be doubled to 0.75 per cent in September.