Hong Kong stocks slide before Alibaba’s report amid tech weakness while NetEase sinks after Blizzard ends gaming deal
- Stocks fell for a second day after Tencent’s report card shows underlying weakness in tech sector while China’s central bank warned about faster inflation
- Meituan slumped on stock overhang risk as Tencent gives away its stake in the food-delivery platform as interim dividend to shareholders
The Hang Seng Index slid 1.2 per cent to 18,045.66 at the closing of Thursday trading, the most in a week. The Tech Index declined 2.2 per cent while the Shanghai Composite Index lost 0.2 per cent.
“The [Meituan] divestment is a signal that Tencent is downsizing its business, either because of the antitrust law or the weakness in the internet sector,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai. “Tencent will focus on the fintech and online game operations and that will cut off some revenue sources.”
The stake cut in Meituan makes the market worried that Tencent could also divest other tech stocks [such as Kuaishou and Bilibili], triggering a sell-off, according to Kenny Ng Lai-yin, a strategist at Everbright Securities International.
Alibaba Group, the owner of this newspaper, is expected to report a 4 per cent rise in revenue in the quarter to September 30 from a year earlier. In the preceding quarter, the firm did not grow its revenue and saw profit slump 50 per cent.
Elsewhere, the People’s Bank of China said that it “will pay serious attention to the underlying possibility of rising inflation, especially changes in the demand side”, in its quarterly report released on Wednesday.
Government reports this month showed activity weakened in October, partly because of tighter Covid-19 controls. Retail sales fell more than expected, while industrial production grew at a slower pace and property sales saw a deeper 23 per cent slump. Growth momentum in the first two weeks of November remained weak, UBS said.
Elsewhere, US retail sales climbed 1.3 per cent in October compared with September, the biggest jump in eight months. Analysts said the solid growth gives the Federal Reserve more room to keep raising interest rates to combat high inflation, undermining recent bets for a Fed pivot away from its tightening path.
Markets in Asia-Pacific also traded lower. Benchmarks in Japan and South Korea slipped 0.4 per cent and 1.4 per cent each, while equities in Australia added 0.2 per cent.