Hong Kong stocks retreat from two-week high as traders weigh earnings outlook, mainland investors pull funds

Hang Seng Index dropped as Hong Kong’s financial markets reopened after a three-day trading break with investors assessing earnings, fund flows

COSCO Shipping surged in Hong Kong and Shanghai exchanges after Chinese shipper issued profit-surge alert for the first quarter

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An investor takes a nap in front of an electronic board showing stock prices at a securities brokerage in Beijing in June 2019. Photo: EPA-EFE

Published: 11:03am, 7 Apr 2021Updated: 4:37pm, 7 Apr 2021

Hong Kong stocks dropped from a two-week high as markets reopened after a three-day trading pause, with technology stocks coming under pressure amid softer corporate earnings outlook.

The Hang Seng Index lost 0.9 per cent to 28,674.80 on Wednesday. The index jumped 2.1 per cent last week to the highest level since March 19. The Shanghai Composite Index lost 0.1 per cent to 3,479.63.

The Hang Seng Tech Index retreated 1.4 per cent, with heavyweight Tencent Holdings sliding 3.7 per cent to HK$629.50. Alibaba Health fell 3.2 per cent to HK$22.40. JD.com declined 3.5 per cent to HK$324.40 after its subsidiary JD Digits withdrew its application for a stock on Shanghai’s Star market.

“Some investors are hesitant about re-entering the market now” after a recent surge, said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. A sluggish momentum in mainland China markets has affected sentiment in Hong Kong, with the inflow southbound funds also impacted, he added.

Mainland investors pulled HK$12.7 billion (US$1.63 billion) in March from Hong Kong stocks through the southbound channel of the Stock Connect programme. That was the first monthly outflow since February 2019, according to exchange data.

About one-third of the 1,500-plus members of the Shanghai Composite Index have published their annual reports through April 6, with earnings trailing analysts’ estimates by 14 per cent, according to Bloomberg data. Profits fell by an average 8 per cent from a year earlier. Chinese stocks dominate listings in Hong Kong.

“When China’s A shares are hovering around 3,400 points and the sentiment in Hong Kong is not that positive, it will be relatively hard for southbound funds to be so pumped up like in January and February,” Wen added.