Hong Kong stocks slip as Tencent disappoints on earnings, stock buyback hopes while Alibaba retreats

Tencent did not unveil an expanded buyback plan after speculation in the wake of Alibaba’s record plan; operating profits, excluding one-time gain, weakened

Hang Seng Index has recouped US$730 billion or nearly a fifth of its value since rebounding from a 10-year low last week

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A man walks past an electronic board displaying the Hang Seng Index in Central, Hong Kong on March 10. Photo: EPA-EFE

Published: 10:53am, 24 Mar 2022Updated: 5:08pm, 24 Mar 2022

Hong Kong stocks fell from a three-week high after a series of earnings disappointments from Chinese companies including Tencent Holdings, which also deflated speculation about an expanded stock buyback programme.

The Hang Seng Index slid 0.9 per cent to 21,945.95 at the close of Thursday trading. The Tech Index lost 3 per cent while the Shanghai Composite Index retreated 0.6 per cent.

Tencent slumped 5.9 per cent to HK$366 as the WeChat operator failed to announce a plan to boost its existing repurchase plan, having spent HK$2.6 billion (US$332 million) in 2021 on its own shares. Alibaba Group Holding, the owner of this newspaper, slid 3.2 per cent to HK$113.80, ending a three-day rebound.

Tencent, China’s biggest video-game developer, also posted smaller core earnings. Excluding one-time gain from sale of assets and investments such as JD.com stake reduction, operating profits declined 23 per cent, according to results late Wednesday.

“The downward economic cycle, polity tightening and the flare-up in Covid19 are still there,” said Yan Xiang, a strategist at Founder Securities. “All these headwinds are adding uncertainty to the outlook of Hong Kong stocks.”