Hong Kong stocks erase gains as Meituan slips on antitrust probe in big week for HSBC, HKEX earnings

HSBC, Standard Chartered and bourse operator HKEX are among a dozen of big first-quarter earnings reports due this week
The State Administration for Market Regulation says it is probing Meituan, more than two weeks after slapping a record fine on Alibaba

Stocks

Zhang Shidongin Shanghai

Published: 10:50am, 26 Apr 2021

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Hong Kong stocks fell for the first time in three days as Meituan slumped after it became the next Chinese tech company to face an antitrust probe. The news overshadowed hopes for earnings upside from index members including lender HSBC.

The Hang Seng Index lost 0.4 per cent to 28,952.83 at the close on Monday, after earlier climbing as much as 0.5 per cent. China Mengniu Dairy and Geely Automobile were also among big losers. The Shanghai Composite Index slid 1 per cent.

Meituan, the fifth-largest index constituent with a 5 per cent weightage, lost 0.5 per cent to HK$305, sliding in afternoon trading to reverse an earlier gain of 0.5 per cent. The State Administration for Market Regulation is probing a practice of forcing vendors to use its platform exclusively, according to an official statement.

The regulatory action followed a record US$2.8 billion fine the SAMR imposed on e-commerce group Alibaba Group Holding, the owner of this newspaper, earlier this month over a similar practice related to “er xuan yi” or pick one out of two.

The probe overshadowed hopes for an earnings boost this week and the outlook for sustained Federal Reserve support at its policy meeting this week. About a dozen of the index members from HSBC to bourse operator Hong Kong Exchanges and Clearing (HKEX) are due to release their report cards this week.

Average profit for the 55 constituents on the primary Hang Seng gauge probably rose by 26 per cent, according to Bloomberg data. Low-base effect may have accentuated gains due to the Covid-19 outbreak a year earlier. Beating the market consensus will be critical for the market to sustain an almost 4 per cent rebound from last month’s low.

01:26

China kicks off antitrust probes into Alibaba over alleged monopolistic practices

“While positive surprises have supported the stock market, the trend on earnings is even more important,” said David Kelly, a strategist at JPMorgan Asset Management. On the Fed, “no actual changes in policy are expected” he added, saying it would prefer that markets “also assume no change in Fed thinking.”

Profit at HSBC, the third-biggest Hang Seng member, probably grew 7.4 per cent from a year earlier, according to a consensus estimate by analysts polled by Bloomberg. The stock added 0.7 per cent to HK$45.10. Standard Chartered, whose profit likely jumped 68 per cent, advanced 1 per cent to HK$51.75.

HKEX climbed 1.4 per cent to HK$491.40. The world’s most valuable exchange operator may say earnings surged 85 per cent on the back or surging trading volume and income from several blockbuster stock listings including Kuaishou Technology.

02:05

HSBC sees second-quarter profits plunge by 82 per cent thanks to coronavirus

China Unicom and Ping An Insurance Group were among the companies that posted higher quarterly profits last week. Still, bad-loan manager China Huarong Asset Management may weigh on sentiment as it sought more time beyond the April 30 deadline to file its earnings amid speculation about a debt restructuring.

Meanwhile, the Fed will hold its two-day open-market committee convening its regular meeting from tomorrow. Policymakers are expected to reiterate their support for the economy by sustaining its ultra-loose policy accommodation.

Most stock benchmarks in the Asia-Pacific region rose, except that in Australia. India’s Covid-19 crisis is worsening, with a million new infections recorded over the past three days.

Three debutants all jumped on the mainland. Winbo-Dongjian Automotive Technology surged 258 per cent from the initial public offering price to 30.18 yuan in Shenzhen. Shoemaker Huali Industrial Group, advanced 201 per cent and Shanghai Luoman Lightning Technologies rose 44 per cent.

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